The Dubai real estate market is increasingly becoming more attractive for investors from across the globe. For real estate investors, it has become clear that buying real estate in Dubai can help them significant profits.
The UAE government also has some attractive schemes to encourage more individuals to invest in Dubai real estate market. Whether you are searching for apartments or villas for sale in Dubai, understanding these government schemes should make the property-buying process in Dubai a bit easy for you.
In this post, you will get to know about some major government schemes that you may utilize when buying a property in Dubai.
Home Mortgage
This is also known as home finance. Banks generally determine its maximum amount based on your monthly salary. Here are the factors you need to keep in mind when applying for a home mortgage.
- Every bank determines the minimum amount of salary accepted because it wants to make sure that the borrower will be able to pay the loan amount back over their entire loan tenure with their salary.
- When you want to buy a property, the bank will grant a total mortgage amount with specified monthly installments that you need to pay to it.
- In case you are an expatriate, you have to make a payment of 25% of the total price of the property that you want to purchase.
Here are the maximum LTV ratios established by the UAE government.
If You Are a Foreigner:
- If the maximum price of the property is AED five million, your maximum LTV ratio will be 75% of your purchase price.
- If the price of the property is above AED five million, your maximum LTV ratio will be 65% of your purchase price.
- If you are buying a second house, your maximum LTV ratio will be 60% of your purchase price.
If You Are a UAE National:
- If the maximum price of the property is AED five million, your maximum LTV ratio will be its 80%.
- If the price of the property is above AED five million, your maximum LTV ratio will be its 70%.
- If you are buying a second house, your maximum LTV ratio will be 65% of your purchase price.
If You Are Buying an Off-Plan Property:
No matter whether you are a foreigner or a UAE national, your maximum LTV ratio will be 50% of your purchase price.
Your Loan Tenure
Your loan tenure will be the maximum timeframe within which you will need to repay your home mortgage.
Here is what you need to know about loan tenure when purchasing a property in Dubai.
- Your maximum loan tenure will be 25 years.
- There is a difference between UAE nationals and foreigners in terms of the maximum age for repayment. For UAE nationals, the maximum age for repayment is 70 years, and for foreigners, it is 65 years.
Rent-To-Own Scheme
In case you do not have enough money to buy a house or cannot take out a home mortgage, the rent-to-own scheme can turn out to be the right option for you. While banks in Dubai attractive mortgage options, some property developers are focused on providing potential buyers with lucrative rent-to-own options.
In simple words, when you choose a rent-to-own scheme for a particular property, you buy it from the landlord or developer. As per the agreement between you and the landlord or developer, you continue paying them for a specified tenure.
Your payment to the landlord or developer will comprise your rent and a part of the price of the property. After the end of the tenure, you will become the owner of the property. Basically, you will be paying above the market rental value of the property to buy your equity and become its owner one day.
You can opt for the rent-to-own using two types of agreements. Here are brief overviews of each of them.
Option to Purchase
This kind of agreement comes with an option for the buyer to cancel the deal and stay in the property as a tenant. As the buyer, you are required to pay the seller an amount called the “option fee.” This is fundamentally the cost of having an option for you and compensation for the seller in case you opt out of the deal. If you decide to cancel the deal, the seller will legally keep the option fee.
Purchase Agreement
In this type of agreement, you and the seller agree on all financial terms in advance. It can either be a future appraisal at a specified period or a set price.
Wrapping Up
Now that you are aware of the most common government schemes available for property buyers in Dubai, you can continue with your searches for apartments or city walk apartments for rent to make your dream a reality.
Just be sure to decide on the right scheme that you want to go with. And if you need any assistance in finding the right property, you can contact fäm Properties, one of the most trusted names in the Dubai real estate world.
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