Why are so many tourists attracted to Dubai?
This metropolis on the Arabian Gulf draws travelers from all over the world. What attracts them to Dubai are tax-free, highest-end shopping, great weather, extraordinary accommodations, incredible restaurants and food, water and theme parks, and pristine almost sterile beaches that go on for miles. With the creation of mega projects like Sports City and Dubailand, the amount of visitors to Dubai is expected to increase significantly in the coming years, and this will help to raise Dubai property value as well.
What is the difference between leasehold and freehold?
At this time condo hotels in Dubai are only being sold as 99 year leaseholds which offer automatic renewal after expiration for a small fee. There is a mounting school of thought that long leases rather than freehold ownership should emerge as the preferred method of purchasing condo hotels. Leasehold is common in many countries for high-rise property. Leasehold grants the duties and obligations of the landlord or freeholder to maintain the whole property in pristine condition. However, in a few months the laws in Dubai are expected to change to allow freehold ownership, and leasehold properties can be converted to freehold. Condo hotels will still be maintained within the standards set by the developer.
What is an escrow account?
An escrow account is an account that is established by your lender to pay your real estate taxes, homeowner's insurance and mortgage insurance on your behalf.
What law establishes escrow account guidelines?
Real Estate Settlement Procedures Act (RESPA) is a federal law that, in general, dictates how lenders establish and maintain an escrow account for you. A few states also have regulations regarding an escrow account for a homeowner within their state; if the state does not have a regulation, the governing of your escrow account falls back to RESPA regulations. Dubai has strict escrow account regulations.
When I find the home I want, how much should I offer?
I can help you in this area by providing answers to these questions: Is the asking price in line with prices of similar homes in the area? Is the home in good condition or will you have to spend a substantial amount of money making it the way you want it? You should get a professional home inspection before you make your offer. I can help you arrange one. How long has the home been on the market? If it's been for sale for a while, the seller may be more eager to accept a lower offer. How much mortgage will be required? Make sure you really can afford whatever offer you make. How much do you really want the home? The closer you are to the asking price, the more likely your offer will be accepted. In some cases, you may even want to offer more than the asking price, if you know you are competing with others for the house.
Can you apply for a loan before you've found a property?
Yes! You have the opportunity to get pre-approved for a mortgage today. A pre-approval will take into consideration your personal information such as income, debt and credit history. If you receive a pre-approval, we will use this information to determine your maximum loan amount. Once you find a property we can complete the remaining pieces of the application.
Have you ever wondered when you should start the mortgage process and how much of a loan you can afford?
The best time to look for a mortgage is before you look for a house. This enables you to determine the amount of money you can borrow and how much house you can afford.
What paperwork will be necessary during the mortgage process?
Once you have submitted your application form, the lender will send you a complete loan package including documents for your review and signature. All you need to do is review the application for accuracy, sign where indicated and return the package, along with any requested documentation. Paperwork will vary by lender as well as the speed the documents are processed. Starting early on this process is beneficial to your home buying process.
How will the issue of rents be handled by the agency?
The agency will regulate the relationship between landlords and tenants via registering all the types of rental contracts. For this purpose a comprehensive database for the rental sector in Dubai has been set and registrations for trade rentals will commence from the beginning of 2008.
Is it possible to get mortgages for property in Dubai?
Yes. Amlak, Tamweel, HSBC, Lloyds, Mashreq Bank, RAKbank, National Bank of Dubai, United National Bank, Abu Dhabi Commercial Bank and Standard Chartered Bank all lend on Dubai property, both on and off-plan. Each one has different rates and terms. Some only lend to residents. You can also get mortgages internationally for property in Dubai. HSBC in the UK lends an asset based mortgage.
How do mortgages in Dubai differ from those abroad?
Firstly, lenders do not lend on every project currently being built. Often buildings are sold that no one lends on at all (though, given the favorable payment structure system in Dubai, that doesn't mean they aren't worth buying). On the other hand it is possible to get a mortgage on many examples of off plan property here, unlike most places in the world.
How do local finance houses assess mortgages?
Usually on your monthly income, less expenses, and then divided by three. This gives the figure they will work from, for each month over the term. They do not base it on how well the asset might perform, nor allows low-loan-to -value (i.e. large down-payment with small loan).
This makes it limited. Even if you are earning a seriously good wage, do not assume that a bank - will lend you substantial sums.
Can I get a pre-approved mortgage?
Yes. This is preferable. Most lenders will work out how much they are likely to lend you before you have a specific property in mind. This means you can then go shopping, and find something you know you can afford.
How much can I borrow?
While resident expatriates can generally borrow between 70% and 80%, non-residents can generally borrow 60% to 70%. It all depends on the lender, and the project they are lending on.
What's a transfer fee?
A transfer fee is payable if you transfer your property to someone else. It is an administrative charge levied by the primary developer.
Do you get a residency visa if you buy a home?
Yes. But your contract should state that you are entitled to one. Residence visas are subject to normal immigration regulations. They are renewable every three years, for example. They do not replace a work permit. And if you have a work permit, your residency will come from that.
Do I have to pay tax on Dubai property if I am resident abroad?
Most states expect you to pay tax on assets abroad. In some jurisdictions, however (the UK being one example), it is possible not to pay, by ensuring that rental income or proceeds from the sale of a Dubai property remain offshore. The best way to do this is through an offshore company where you can keep revenue or an offshore deposit account with an international bank which allows you to deposit and transfer funds with a certain amount of privacy.
