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How To Prepare Your Finances To Buy A Property In Dubai

Discover this guide to preparing your finances for buying a property in Dubai, including saving for a deposit, managing debts, and improving your credit score

Buying a property in Dubai is an exciting opportunity, but it also requires careful financial planning. Whether you’re looking to buy a cozy studio or a spacious villa, preparing your finances is the first step toward a successful property purchase.

This blog post outlines the practical steps to prepare your finances for buying a property in Dubai. 

Save For A Deposit

One of the crucial steps in preparing to buy a property in Dubai is saving for a deposit. If you are planning to buy an off-plan property, you will typically need to pay 10-20% of the purchase price upfront as a down payment. Or, if you are planning to buy a ready property using a mortgage, you will need a deposit of at least 20% if you are an expat, or 15% if you are a UAE National. 

It could be a good idea to open a high-interest savings account specifically to save for a deposit. This will allow you to easily track your progress, keep the funds separate from your current account, and allow you to grow your pot by earning interest. Make it a habit to contribute a fixed amount every month as soon as you get paid, treating it like a non-negotiable expense. 

Save For Additional Fees

There are additional costs of buying a property in Dubai that should be factored into your financial plans. These can include Dubai Land Department fees, agency commissions, and mortgage fees. 

In total, additional fees can total about 5%-8% of the purchase price. The exact fees that you pay will depend on whether you buy an off-plan or ready property. If you buy a ready property, there will also be additional costs to pay if you need to finance the purchase using a mortgage.  

Did you know: Some banks allow you to include some of the purchase fees in the mortgage, reducing the upfront costs that you need to save for. An experienced Mortgage Consultant can guide you on this.

Pay Down Debt

High levels of debt can negatively impact your ability to secure a favorable mortgage. Lenders look at your debt-to-income ratio as a measure of your financial health. Before applying for a mortgage, focus on paying down high-interest debts like credit card balances. This will boost your credit score, improve your eligibility for mortgages, and free up more of your income for saving towards your property.

Budget Your Future Expenses

Owning a property comes with ongoing expenses, such as insurance, maintenance, and service charges. When planning for your future home, ensure that you factor these expenses into your budget to ensure that you can comfortably afford them on top of your mortgage payments.

Get an estimate of your monthly mortgage payments using our Mortgage Calculator.

This can give you additional confidence about buying a property and ensure you don’t get any nasty surprises down the road. 

Improve Your Credit Score

Your credit score plays a significant role in determining your eligibility for a mortgage and the interest rate that you will be offered. To build and maintain a good credit score, you should make sure that you always pay your credit cards, loans and utility bills on time, maintain good credit utilization (keep credit card balances well below the limit), and pay off any overdue debt. You should also regularly check your credit report to ensure that there are no inaccuracies that could negatively impact your credit score. 

Consider Your Long-Term Goals

Buying a home in Dubai is a significant commitment. Before making the purchase, you should consider how it fits into your long-term plans. For those only looking to be in Dubai for a short period, or if you want to maintain flexibility over where you live, it may be a better idea to rent a property. For more guidance, check out our blog post: “Is it better to buy or rent a property in Dubai?” 

Speak to a Mortgage Advisor

For a first-time buyer planning to buy a property using a mortgage, navigating the complexities of all the different mortgage providers and products can be daunting. Speaking to an experienced mortgage advisor is vital for gaining clarity. They can offer insights into the best mortgage deals available in the market, tailored to your financial situation. Additionally, they can guide you through the application process, making it smoother and easier to understand. 

Preparing To Buy A Property

Preparing your finances to buy a property in Dubai requires careful planning and discipline. By following the steps in this post, you can move closer to owning your dream home in Dubai and avoid any problems along the way. 

Written by Joshua Hughes

Published on 15 March 2024

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