Buying a house in Dubai may seem like a distant dream for many living in Dubai because of the high down payment requirements. So here’s a list of 6 helpful tips that will get you on the right track for your saving goals. Soon enough, you’ll be ready to pay for your dream home!
What is the minimum down payment in Dubai?
UAE law requires UAE nationals to have a down payment of at least 15% of the property value, and non-UAE nationals to have a down payment of at least 20% on properties less than AED 5 million.
That goes up to 30% and 35% respectively if the property is over AED 5 million, and it goes up further still to 40% and 45% for UAE nationals and non-nationals if you’re buying your second property.
And don’t forget, alongside the down payment you’ll have to pay roughly 7% of the property’s value upfront in additional purchase costs, eating further into your savings.
In other words...that’s a lot of money to save! So if you’re serious about buying your first or second property, you’ll need a clear savings plan.
1. Calculate your down payment with Huspy’s mortgage calculator
If you know how much you want to spend on a house, the first thing to do is find out how big a down payment you will need to pay. Our mortgage calculator can quickly and easily calculate exactly how much you will need to save for your property’s down payment. All you need to do is enter the property price and our calculator will automatically tell you how much you’ll need to save. Give it a go!
2. Set a savings goal
Once you know how much you will have to save, the next step is setting out a savings plan based on how much you earn, how much you can afford to save each month, and how soon you want to reach your savings goal.
If you want to reach your goal sooner, in the next three to five years, then you will likely need to save more compared to if you are thinking about getting a house much later down the road. So consider your priorities, how much you can seriously afford to put aside each month, then stick to it!
3. Clear your debts
The more debt you have, the more difficult it is to save. Because if you have credit card or loan debts chipping away each month at your income, then that’s less money to put aside for your future home. So this should be top of your list of priorities - becoming debt-free!
4. Open a savings account
If you don’t have one already, then now is the time to open a savings account. It’s a simple step to take but will make all the difference if you want to achieve your savings goal.
While interest rates are typically less than 1% on savings accounts in the UAE (and so not that great for getting the most out of your savings), it’s an essential step that will help you create a separate pot from your regular spending or even holiday savings account.
5. Start budgeting!
If your long-term goal is to save as much as possible each month, then it’s a good idea to work out exactly how much your monthly expenses are versus how much you need to be spending each month to save.
Work out the total cost of your rent, utilities, car, mobile bills, and other regular outgoings by putting them into a simple spreadsheet or budget app. You’d be surprised how much just seeing and paying attention to your regular outgoings keeps you mindful of overspending - especially when you’ve got a 15% or 20% down payment as a target!
6. Downsize into a cheaper apartment
Living somewhere like the Dubai Marina while trying to save for a down payment may not be the best way to save. Of course, we all want to live comfortably, in a nice apartment, in a great area. But when it comes to saving for a down payment, you may need to reconsider and reprioritise. Moving into a more affordable apartment in a cheaper area will go a long way towards helping you save towards your dream home.
Once you’ve got your down payment, it’s time to get pre-approved
Once you’ve done the hard work of saving all that hard-earned money towards your down payment, the next step is getting pre-approved for your mortgage. You can speak to one of our independent mortgage advisors free of charge to assess your mortgage eligibility. Alternatively, you can get started online by answering a few personal questions about your income, liabilities, and how much savings you have and we’ll be able to determine whether or not you should qualify for pre-approval from a bank of your choosing.