Abu Dhabi private wealth manager Waqas Babar from Globaleye shares his top tips for buying property
For most of us buying a property means putting our name to probably one of the biggest assets we will own, making it both daunting but exciting at the same time. If you get this right then history would suggest you are certainly in the money. You may be familiar with property related terms such as location, location, location! However, get it wrong and it can all easily go downhill with issues such as not being able to sell or even having bad tenants.
With this in mind I would like to point out some simple considerations to make when looking to get financing to buy a property. My top seven tips are as follows:
1. Get a mortgage approval in principal first before finding your property, then you know how much you can borrow and your purchase budget. I am sure you agree it would be a nightmare to find the house of your dreams with your heart set on it only to find out you cannot get the funding to buy it.
2. Shop around, don’t go with the first mortgage you are offered, even from your own bank as the market is very competitive and there are deals out there to be had. Interest rates are at record lows globally, so have a good look to see who can offer you the best deal.
3. Get professional advice and mortgage rates, i.e. through an approved and reputable mortgage broker and let them do the legwork – for a reasonable fee of course. Dealing with a regulated and licensed professional will ensure unbiased advice and accountability if you need it, giving you peace of mind throughout the process.
4. Make sure you have all the finances in place, not only for the mortgage payments but the deposit for the property and other expenses related to the property purchase like land registry fees, administrative costs and legal fees, etc. While speaking to your mortgage advisor ask them to give you a complete breakdown of all the costs so you have no nasty surprises afterwards and can budget for it all.
5. Also, including your monthly mortgage payment and all your other debt repayments, should not be more than 50 percent of your monthly income as per Central Bank rules, therefore you don’t overexpose yourself. This is a very important point as over burdening yourself isn’t healthy both financially and mentally. It would be awful if you find yourself in a situation where you are out of employment or have a reduction in your income, then at least you can be in a position to sustain your everyday running costs for a defined period until you get back on your feet.
6. Speak to your mortgage broker or lender about the effects of you leaving the UAE and how this would impact the mortgage and obligations you have in place. For instance, if this affects your immigration status or the bank would like you to make certain arrangements when you are not living in the country then this must all be discussed at the outset and again your mortgage advisor may be able to offer advice in this area.
7. Finally, and most importantly, get professional advice from a wealth manager to protect you and your family against the worst happening with your health and/or losing your life so that you have either enough assets or insurance cover in place to pay your mortgage and debt liabilities in such circumstances. If you are the breadwinner in the family then how would your loved ones cope should the worse happen to you? Statistically one in three of us will have cancer before reaching the age of 65!
Either way there are no hard and fast rules about the whole process, however dealing with the right service providers and professionals will make your journey to either that next investment or even a nest egg for you and the family a much smoother ride.
