There has been a massive increase in the popularity of off-plan properties in Dubai in recent years. The very fact that it allows buyers/investors to buy properties located in prime locations at comparatively low rates attracts is what attracts them the most. Otherwise, no one can even think of buying one of the waterfront homes in Dubai because of their high rates.
The outbreak of COVID-19 further reduced property rates, as the demand lessened as well. People had other urgent matters to cater to rather than buying properties. Furthermore, initially, when the COVID-19 cases were reported, the government imposed the lockdown, and construction work was halted. This led to the delay in their completion, making things different for developers.
Things, however, are looking rather positive now. The property market, too, is showing signs of recovery. In such a situation, it’s a wise idea if you are looking to buy an off-plan property in Dubai. The rates, at the moment, are on the lower side, and the investment can be expected to yield high returns in the years to come.
The first thing you need to do after you have decided to invest in off-plan properties is to arrange for funds. And for this reason, many people opt for a mortgage loan. If you have also decided to take the same route, there are certain things you need to know. In this post, we have discussed some of them. Have a look:
Loan to Value Ratio
If it is your first time buying an off-plan property in Dubai, you must know about the loan to value (LVR) ratio. It basically specifies how much amount the buyer has to pay and how much it is financed.
To put clearly, LVR for ready properties in Dubai amounts to 75%. It signifies that banks or financial institutes can finance up to 75% of the total value of the property. The rest of the amount is to be paid by the buyer. In the case of off-plan property, LVR is 50%. This means that the buyer has to pay 50% while the remaining amount can be financed.
Bear in mind that the bank/financial institute will only release funds for the property if the buyer has already their share of the sum. Also, it is important to note that LVR remains the same for both locals and ex-pats.
The Selection of the Lender
Numerous banks offer house loans. Other than that, there’s an option to get them from private lenders as well. Both have their own perks. With banks, you can rest assured that there’s no risk involved since you are dealing with a renowned financial body. However, be mindful that they tend to be strict when it comes to meeting the eligibility criteria. Your loan application is more likely to be rejected if your credit score is poor.
Private lenders are a little flexible in this regard. However, the rate of interest charged by them can be higher. Thus, you must make this decision after thorough consideration. If you have selected a private lender, make sure they are registered and certified.
Home Loan Pre-Approval
Do not start your property hunt before obtaining home loan pre-approval. For those who do not know, home loan pre-approval is a document that shows the buyer is eligible to get the loan. The maximum loan cap is also mentioned in this document. Therefore, the buyer can start looking for properties that meet fall in their budget bracket.
To put it simply, if you plan to buy one of the lavishly designed Stella Maris apartments, you should get an idea of how much your lending capacity is. And this is exactly what home loan pre-approval specifies.
Eligibility Criteria
No bank or financial institute will lend you money unless you meet the eligibility criteria set by them. This criterion, however, varies from institute to institute. You must know about the criteria of different banks and lenders in detail before finalizing them. Furthermore, you should also know about the requirements that you have to fulfill to avoid landing in a troublesome situation in the long run.
In a nutshell, knowing about every detail beforehand will make the process easy and quick for you. So, it’s better that you equip yourself with extensive knowledge and then apply for a loan for off-plan property.
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