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Homeowners in Dubai can sell their mortgaged property without any difficulty. There are, however, additional steps that the parties have to go through in processing the transaction. In this blog post, you will learn the process involved in selling a mortgaged property in Dubai.
The Process for selling a mortgaged house
After the seller has found a buyer and Form F (Memorandum of Understanding) that outlines all the details and terms of the sale has been signed, the seller will go through the following steps.
1. Request a liability letter from the lender.
The seller will need to obtain a liability letter from their bank, which indicates the outstanding amount on the property.
2. Request a NOC from the Developer
The seller will apply for a NOC (No Objection Certificate) from the developer of the property. This is to ensure that there are no outstanding service charges owed to the developer.
3. Blocking the property
To protect the buyer, a process called ‘property blocking’ will take place before the buyer clears the seller’s mortgage. To block the property in the buyer’s name, the seller, buyer, and other parties involved visit Dubai Land Department (DLD) registration trustee’s office. The buyer will be able to clear the seller’s mortgage while ensuring that the seller cannot sell the property to anyone else besides the buyer.
To block the property, the following documents will be required:
- Letter from seller’s bank confirming liability
- Form F (MOU)
- NOC from developer
- Copy of the title deed
- Cheque payable to the bank (for the amount on the liability letter)
- (For the balance of the purchase price) Cheque to the seller
- Cheque to Dubai Land Department (for the 4% transfer fee)
- Original passport, visa, and Emirates ID (buyer and seller)
- Obtain a clearance letter and the original title deed.
The buyer has to pay a cheque to the bank. As soon as the seller’s mortgage has been cleared, the bank will issue the seller a 𝗽𝗿𝗼𝗽𝗲𝗿𝘁𝘆 𝗺𝗼𝗿𝘁𝗴𝗮𝗴𝗲 𝗿𝗲𝗹𝗲𝗮𝘀𝗲 𝗹𝗲𝘁𝘁𝗲𝗿 𝗼𝗿 𝗰𝗹𝗲𝗮𝗿𝗮𝗻𝗰𝗲 𝗹𝗲𝘁𝘁𝗲𝗿 𝗼𝗿 𝗻𝗼 𝗹𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗹𝗲𝘁𝘁𝗲𝗿 with the original title deed.
4. Transfer the property to the buyer
To transfer ownership of the mortgaged property, both parties must visit the DLD registration trustee’s office. The seller’s existing mortgage will be released, and a new title deed will be issued in the buyer’s name.
For the seller’s mortgage to be released, the following documents must be submitted:
- Original title deed
- Mortgage release letter from the bank
- Passport, Visa, and Emirates ID
A mortgaged property will go through the above process when it is sold to a cash buyer. If the buyer is also mortgaged, the selling process will take longer since the seller’s mortgage is only cleared after the buyer’s bank has approved the loan. Furthermore, the property blocking process will not be required because the original title deed will be released to the buyer’s bank after the seller’s bank settles the mortgage.
Fees For Selling Mortgaged Properties In Dubai.
Early Settlement Fee
Sellers will have to pay this fee if they pay off their mortgage early. The recently reduced early settlement fees in the UAE mean sellers will only have to pay 1% of the outstanding amount or AED 10,000 (whichever is less).
Blocking Charges
The seller pays this fee before the buyer clears the seller’s mortgage. The amount starts at AED 1000.
Mortgage Release Fee
To release the seller’s mortgage, a fee of AED 1,290 must be paid. Additional fees must be paid to the registration trustee. The mortgage release fee for an Islamic mortgage is approximately AED 1,560.
NOC Fee
The NOC fee usually ranges from AED 500 to AED 5000 plus VAT, depending on the developer.
Are you selling a property which is mortgaged? We have specialists who can assist you. Get in touch with us today.
