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Cityscape Global
 
Cityscape Global | Dubai Real Estate Exhibition & Conference | Property Investment

10 - 12 November 2020

DUBAI EXPO 2020 CENTRE, UAE

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    • Guide to Saving for a Mortgage Down Payment

     

    Even if it’s not something you are looking to do in the immediate future, buying a house still probably tops your long-term financial agenda. The biggest challenge here is funding the downpayment from your personal savings. Souqalmal.com rounds up
    ways to easily and systematically save for this purchase of a lifetime.

    When buying a house, more important than shortlisting mortgage lenders and
    calculating monthly installments is putting together the substantial cash sum
    or the down payment that needs to be paid up front before finalising the deal. 

    Loan to Value in the UAE

    The Central Bank of the UAE tightened the maximum Loan to Value (LTV) in 2013 introducing mortgage caps. This translates to expats settling 25 percent down payment on the first purchased property below AED 5 million and 35 percent for a property over AED 5 million. 

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    The down payment rises to 40 percent for subsequent property purchases. UAE nationals, however, are required to settle a down payment of 20 percent fortheir first property under AED 5 million and 30 percent for a property above AED 5 million. For subsequent property purchases, the down payment increases to 35 percent. For off plan properties, the maximum mortgage credit value is 50 percent and this applies to resident expats as well as UAE nationals.

     

    Blueprint for a successful down payment savings plan

    1.    The first step is to familiarize yourself with the real estate market in the region. Combined with the LTV you are eligible to acquire, this should give you an idea of how much you need to save for the down payment.

    2.    The next step is to set a realistic timeframe to achieve your target. Then split it into more achievable monthly or annual goals.

    3.    The final step is to develop a sound strategy and fiscal discipline to build some serious savings.

    Building Your Savings

    Hereare some strategies that can prepare you

    Budget – Budgeting is the foundation of thesavings process. It simply refers to a spending plan that balances your income with your expenses. Documenting your spends is the best way to get a handle on your finances. It is about understanding how much money you have, where it goes and how much of it can be saved. Once you have the summary laid out in front you, it will be easier to identify and cut back on wasteful and unnecessary expenditures to maximize your savings.

    1.      Pay off those debts – Paying off credit card debts and other loans at the earliest is important for two major reasons. First, credit cards issued in the UAE come at a staggering 40 percent APR on average. For individuals settling the minimum 5 percent every month, debt can accumulate at a rapid pace. As such, it makes perfect sense to quickly pay off
    these expensive debts. Secondly, settling debts can free up more cash from your paycheck which can then be saved towards the down payment. It should also be noted that high credit limits and excessive loans would negatively affect your DBR (Debt Burden Ratio), which in turn will impact your eligibility for a mortgage approval.

    2.      Bank your windfalls – A sudden windfall profit like inheritance money, gift, bonus, lottery winnings or legal settlements can play a massive role in getting you closer to your goal. It can drastically accelerate your savings process by trimming off a few years from your estimated timeframe.

    3.      Boost your income – You can also fast track those savings with a boost in your income. Take up something in your spare time, consider starting a side business, work towards a raise or a promotion, do overtime, get freelance work or a second job.

    4.      Banking aids – Banks too offer some remarkable ways to save without having to make any extra effort. You can open a dedicated online savings account for your down payment. This makes it easier to track your progress. Moreover, you can activate an automated savings plan on these accounts.

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    Thank you to our sponsors & partners

    • DLD

      Strategic Partner

    • Nakheel

      Foundation Partner

    • MOMRA

      Platinum Exhibition Sponsor

    • Arada

      Official Partner

    • Maisonette

      Platinum Conference Sponsor

    • Provis

      Platinum Conference Sponsor

    • Regus

      Workplace Partner

    • LWK+ Partners

      Architecture Partner

    • C.Savva

      Gold Conference Sponsor

    • Colliers International

      Gold Conference Sponsor

    • Eltizam

      Gold Conference Sponsor

    • Kohler

      Gold Conference Sponsor

    • Altus group

      Silver Conference Sponsor

    • Mott Macdonald

      Silver Conference Sponsor

    • Electrolux

      Platinum Awards Sponsor

    • JLL

      Gold Awards Sponsor

    • RIBA

      Supporting Association

    • Oxford Business Group

      Supporting Partner

    • Official Business Website

    • Entrepreneur ME

      Regional Media Partner

    • Forbes ME

      Official Business Magazine

    • Dubai Eye

      Official Radio Station

    • Dubizzle

      Property Portal Partner

    • Media 24x7

      Official outdoor partner

    • Emirates

      Official Airline

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    Kara Patterson
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