In a property market that attracts a lot of international investors and home buyers, one of the most important things to comprehend is finances. Understanding exchange rates, payment plans and most importantly qualifying to purchase a property is essential when dealing with a different country that has regulations and practices distinct from the country of your origin.
In the competitive real estate market in Dubai, many expats already own property, and many more who are interested in relocating or investing in Dubai properties. Let’s discuss some of the main issues expats face when trying to finance their property in Dubai.
Eligibility and Income criteria
Financing lenders have their own parameters to determine the minimum income for expats, which generally ranges from AED 15,000 to 25,000 per month. Expats who are employed can prove their eligibility through standard salary certificates, bank statements and employment records, but freelancers and entrepreneurs have stricter criteria that are applied matching their nature of work.
Loan-to-value ratio limits
The percentage that expats are allowed to finance for their property purchases ranges between 75% - 80%. This means they must initially put down 20% - 25% of the property value to finance the rest.
Credit history and documentation
International credit history is not valid when applying for lending inside the UAE. Expats should present a credit history of 6 - 12 months in UAE whereas any gaps or irregularities may cause in denial or delays in the approvals.
Limited mortgage products for non-residents
Investors who are not UAE residents will get lesser options when it comes to getting financing options in UAE. This leaves foreign investors with very little options to turn to.
Valuation and property type limits
Not all properties are eligible to receive financing. Even if the property is eligible to be financed, the bank will conduct their own valuation and only the value determined by the bank or less will be processed. Therefore, if the property value is above the bank valuation, the buyer should cover the difference.
Currency exchange limits
With tighter Anti-Money-Laundering regulations, lenders are more cautious and may have tighter limits on payments received outside the UAE.
Complicated bureaucracy & higher rates
Different countries and bureaucracies have their own process for financing properties. In the UAE, foreign investors might experience delays, higher service rates and complicated documentation processes compared to the resident buyers.
Legal comprehension
Moving forward without understanding the complete process of purchasing a property in Dubai as an expat is not advised. DLD regulations, fees, and every aspect of the transaction should be comprehended before getting involved in a property purchase.
If you are an expat, whether residing in or outside the UAE, looking to invest in Dubai’s property market, comprehension is key. In a highly competitive and evolving market, it is vital to understand regulations, fees as well as all relevant stats in the current market. Handling the process independently in a foreign country is not advisable if you are not a professional in the industry with a close network in the market.
Seeking professional assistance buying property in Dubai is one of the smartest decisions an investor can make. It ensures that you gain complete understanding of the current market, trends and future expansions to find you the best deal in Dubai. In addition, property consultation makes sure that all the documentation and financing steps are in order, ensuring avoid any mistakes or delays while keeping the entire transaction transparent, swift and secure.
At Anarock Middle East, our expert consultants are equipped with top tier market tools, strong industry connections and extensive training to make sure that our clients receive the best deals in Dubai that match investment goals of each investor. Contact us to share your property goals with us.