Most first time home buyers focus only on the cost of the property and the mortgage interest rate. Even though it is very important to understand the lending process, there are certain hidden costs to consider when buying a property for the first time. When buying a property, spending money does not stop at the down payment. In fact, some fees must be paid up front while others can be paid together with the loan.
One fee that the buyer must accrue is the Dubai Land Department (DLD) transfer fee. You are required to pay 4% of the property value as well as AED 580. Also, if you fail to register the property within 60 days, you will be required to pay 8% of the property value and AED 10,000 as fine.
Furthermore, if you are buying the property with a mortgage, you will be required to pay 25% of the loan amount plus AED 290 to register the mortgage against the property. However, this fee should be shared between the buyer and the seller and in most cases it is negotiated as part of the transaction.
Another prominent fee that you should consider is the property and contents insurance. It is advisable to insure the property and contents from damages as a result of an accident or natural disaster. Don’t be fooled that the UAE is safe, accidents are inevitable and can happen anytime and anywhere. Home content insurance covers for your items from potential damage and theft. On the other hand, property insurance can protect you from major repairs in case of a disaster.
There are other more expenses that are involved in maintaining the property. According to experts, it roughly cost 2% of the property value to cover the expenses every year, including the mortgage. For instance, if you buy a 4 bedroom villa for AED 5 million, you will need around AED 100000 every year to maintain it.
As a first time home buyer, it is important to know the fees involved in owning and maintaining a property in the UAE to help you set the appropriate budget. Maintaining the property in good working condition will help to increase value, especially if you are planning to resell it.
So before you start dreaming about that property in Port De La Mer apartments, District One Villas or Emaar Beachfront apartments, make sure you are able to cover all the costs.
