If you’re moving to Dubai and thinking about your accommodation options – or you’re interested in buying an investment property in Dubai perhaps, chances are you’ll be thinking about your home financing options and also the additional costs that a home purchase will incur.

In this guide to mortgages and buying costs in Dubai we will cover everything you need to know about getting finance in place to make a purchase in Dubai.  We will also tell you about the hidden costs that you need to be aware of when you make an offer for a resale property, and what you need to watch out for if buying off plan and paying in instalments.

To cut to the chase and get the facts you really need, read on…

If you want to buy a property in Dubai you need to know that the amount you can borrow will depend on your residency status and also yours and your spouse’s combined monthly income.  If you’re a foreign resident already living in Dubai, then you can borrow up to 80% of the asking price or the property valuation – whichever is lower.  On the other hand, if you have yet to move to the emirate or you’re buying an investment property and are therefore non-resident, your mortgage will likely be limited to 60%.

In terms of the amount you can borrow, it is also dependent on the amount you can prove you earn with a ceiling of 60 times yours and your spouse’s joint monthly income.  Naturally Dubai has not been immune to the global credit crisis and so this has placed something of a limit on the amount banks are currently willing to lend…but their reluctance is countered by the fact that the government is actively keen to keep the property market buoyant.  So, assuming you have good proof of income and are not seeking to borrow up to maximum limits, you probably still stand a good chance of raising finance.

If you want to buy one of Tamweel’s properties you can apply for their very own ‘pre-approved finance’ product.  This allows you to secure your finance in advance and then choose from their range of properties from their current portfolio.  This is a very nice way of going about it for those who like to get all the i’s dotted and all the t’s crossed before they move ahead and make an offer on a home.

If you’re buying a property in Dubai off plan, you need to know that all stage payments are now monitored by the Lands Department and have to be made by you into an escrow account which is a form of trust.  Money is only released from this account when specific contractual building conditions have been met, and the entire system has been put in place to protect you, the buyer.  The system prevents builders from failing to meet their contracted obligations and/or running off with your money!

If you decide you want to buy a resale property, bear in mind that if the vendor is selling it before they have received their deeds and/or paid the final instalments for it to the developer, they may still have a financial obligation to the developer and/or be liable for a transfer payment.  Ensure your contract is watertight so that you don’t inherit their debt – and also bear in mind that some developers charge their original buyers for making a resale of a home before deeds have been transferred.  It is normal for the buyer to wear this transfer cost – which can be as much as 7% – but ensure that it is worded into your contract that you are not liable for this fee.

You need to use a lawyer when buying – and use one that your developer, estate agent or vendor are NOT affiliated with otherwise you will end up being misrepresented and your best interests will certainly not be at your lawyer’s heart.  You will need to cover their costs – ask up front about these – and you will have to cover the estate agent’s costs of about 1% – although these can sometimes be split with the vendor.  Finally, think about maintenance charges on any accommodation with shared amenities, facilities or grounds.  These costs may be fixed, or they may depend on the square meter-age of your property.  Be forewarned about these charges as they can be very substantial indeed and not protected from ridiculous annual increases.  Be aware!