Founder I Sales Director
Buying a home for the first time in Dubai may seem like a daunting process. It entails finding the property, secure financing, making an offer, and finalising the purchase. For a first time homebuyer, it can be emotional and challenging. One would be fearful of making an expensive mistake. Hence in making this decision, one must carefully plan accordingly. This article serves as a guide to help those who are considering buying a home for the first time.
Determine your long term goal
First and foremost, determine what your long-term goal is and how becoming a homeowner fits in with that goal. Different people purchase homes to accomplish various dreams. For example one may be looking to transform rent payments into mortgage repayments that give something tangible. Or maybe one will be looking for independence and enjoy the idea of being your own landlord. For others, buying a home is an investment. Decide which of the above your ultimate goal is.
After evaluating your goals, the following questions are very important:
1. How is your financial health?
Before embarking on the search of your dream home, do an audit of your financial status. You need to be prepared for both the purchase and the expenses involved. The outcome of this audit reveal whether you are ready to take the big step, or you need to do more to prepare. Begin by considering the following:
- Look at your savings.
Make sure you have an emergency savings account with three to six months of living expenses. Why? When you buy a home in Dubai, there will be some considerable up-front costs which include the down payment, Dubai Land Department fees, property registration fees, mortgage registration fees, agency fees, insurance fees and many more. You may need money put aside not only for those costs, but also for your own contingencies.
- Review your spending.
You need to know how much you are spending every month. This calculation will help you determine how much you can afford to allocate to your mortgage payment. Make sure to account for everything such as utilities, food, clothing, entertainment, and any miscellaneous items.
- Check your credit rating.
To qualify for a home loan, you will need a good credit record. The Equated Monthly Instalment (EMI) in Dubai should not exceed 25% of your monthly income.
2. Which type of home will best suit your needs?
Homes come in various types including studios, apartments, townhouses and villas. Each option has its pros and cons, depending on your homeownership goals. You need to decide which type of property will help you reach your goal.
3. Which specific home features do you want?
While it is good to retain some flexibility, one has to bear in mind that you are making perhaps the biggest purchase of your life, and you deserve to have that purchase fit both your needs and wants as closely as possible. Your list should include basic desires, like size of the home, neighbourhood, including smaller details like bathroom layout and a kitchen fitted with durable appliances. Scanning real estate websites and getting advice from real estate agents can help you get an idea of the pricing and availability of properties offering the features that are most important to you.
4. How much mortgage do you qualify for?
It is important to get an idea of how much a lender will give you to purchase your first home before you start searching. You may think you can afford a AED 1million home, but lenders may think otherwise based on factors like how much other debts you have, your monthly income, and how long you have been in Dubai and at your current job. Also many real estate agents will not spend time with clients who haven’t clarified how much their budget is.
In addition
Get your mortgage pre-approved
Make sure to get your mortgage pre-approved before starting to search for your dream home. A mortgage pre-approval sets an upper limit on the amount a bank can loan you. This helps save time for you will be able to eliminate houses that are outside your price range, and avoid the disappointment of falling in love with a house, only to discover that you do not qualify for the necessary loan amount.
Also, a pre-approval letter is a great negotiating tool when you submit it together with your offer. It shows you can close the deal faster, which is usually very appealing to many sellers. Without the mortgage pre-approval, it will be different. Since it takes time to get a mortgage pre-approval and the property market is very competitive, you may miss out on a home that you could qualify for because you couldn’t get your pre-approval letter on time. Plus, sellers receive multiple offers, and the one who already has a mortgage pre-approval will generally get the deal.
Mortgage repayment
Your monthly mortgage payment will depend on your home price, the down payment, loan term, property taxes, homeowners insurance, and interest rate on the loan.
Work with a trusted Real Estate Agent throughout the process
No matter which stage you are at in your home buying journey, it is advisable to work with a real estate professional for best results. They can help you with the initial steps, like educating you on the process and connecting you with a trusted lender to getting your mortgage pre-approval. Once you are ready to begin your search, a real estate professional can help you understand details of your preferred location and search for available homes. And when it’s time to make an offer, they will be an expert advisor and negotiator to help your offer stand out above the rest. They aim to make the process as hassle-free and relaxed as possible.
Are you looking to buy your dream home for the first time? We can guide you through the home buying journey. Get in touch with us!
