Finance

Having reached a decision to buy a property in Dubai's booming market, and perhaps having already found one, the next step is investigating the various sources of financing available.

Payment structures

A feature of many freehold purchases worth noting here is the way that buyers pay for new, off-plan properties. Normally, you pay a percentage on initial purchase (10% perhaps) and make another payment a month later, followed by regular payments while the property is being built. You then make a final payment (often 20%) when you take possession. This can enable you to avoid paying cash before the property has been built, or having to take out a mortgage. But be careful with the terms and conditions in your purchase contract. We recommend that you contact us when you find a property you might consider buying. We will be able to help you through the small print, and advise you on the cheapest, safest payment system.

Mortgages

With interest rates still relatively low (the typical borrowing rate in Dubai is about 6.5%), mortgages are relatively affordable. You may wish to try obtaining a mortgage in your home country (the UK, for example), if that is cheaper. In addition, you may find that mortgage brokers there are more familiar with your needs. Local mortgages were difficult to obtain until fairly recently. However, changes during 2005 in legislation, and increasing market maturity have brought about the opening of several local mortgage service providers.

Local banks such as HSBC Dubai, RakBank, Mashreqbank and the National Bank of Dubai have started offering mortgage facilities for buyers of residential and buy-to-let properties. In addition, Amlak Finance and Tamweel are two non-banking firms to enter this market. As the property sector expands, we can expect to see more competition in mortgage provision, and this should affect terms and conditions as well as fees.

Currently, expatriates can receive up to 70% of the purchase price of their property as a mortgage. However, conditions vary.

With our expertise in the local market, we can update you on new financing opportunities and guide you through the mortgage process.