For most homebuyers saving their deposit is the biggest hurdle to home ownership. Here is how you can stretch your deposit to buy a bigger and better home.
Most borrowers in the UAE are not aware that there are mortgages available that allow you to add most of the borrowing and purchase costs to your home loan. In practice this significantly increases your borrowing capacity.
Here is a case study to show the effect of adding purchase costs to your home loan
A client holds cash of AED 500k. Subject to them having a suitable income, a cash deposit of this size would allow them to purchase a property worth approximately AED 2.5m:
| Purchase price | AED 2,500,000 | |
| Down payment needed | 20% | AED 500,000 |
| DLD fee | 4% | AED 100,000 |
| Agent fee* | 2% | AED 52,000 |
| DLD fees (Miscellaneous) | AED 9,568 | |
| Valuation fee (approx.)* | AED 3,150 | |
| Total Cash Required | AED 666,020 |
*including 5% VAT
By adding 4.8% of the fees into the mortgage, the out-of-pocket purchase costs would be reduced massively. That saved money can be used to increase the size of your 20% deposit thereby increasing your budget for your dream home to AED3.1m. An increase of AED600k.
| Purchase price | AED 3,100,000 | |
| Down payment | 20% | AED 620,000 |
| DLD fee | 0.8% | AED 24,800 |
| Agent fee* | 0.4% | AED 15,500 |
| DLD fees (Miscellaneous) | AED 10,370 | |
| Valuation fee (approx.)* | AED 3,150 | |
| Total | AED 673,820 |
Where in the first scenario the maximum purchase price is AED 2.5m, by adding the fees of 4.8%, this increases to an incredible AED 3.1m, an uplift of 24%! This clearly has massive benefits, allowing you to buy a bigger property, or in buy in a better location.
