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 800k. 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 | 25% | AED 625,000 |
| DLD fee | 4% | AED 100,000 |
| Agent fee | 2% | AED 50,000 |
| DLD fees (Miscellaneous) | AED 9,568 | |
| Valuation fee (approx.) | AED 3,000 | |
| Total Cash Required | AED 787,568 |
By adding 3% of the DLD fee and 1.5% of the agent’s fee to the mortgage, the out-of-pocket purchase costs would be reduced massively. That saved money can be used to increase the size of your 25% deposit thereby increasing your budget for your dream home to AED2.95m. An increase of AED450k.
| Purchase price | AED 2,950,000 | |
| Down payment | 25% | AED 737,500 |
| DLD fee | 1% | AED 29,500 |
| Agent fee | 0.50% | AED 14,750 |
| DLD fees (Miscellaneous) | AED 9,568 | |
| Valuation fee (approx.) | AED 3,000 | |
| Total | AED 794,318 |
Where in the first scenario the maximum purchase price is AED 2.5m, by adding the fees of 4.5%, this increases to an incredible AED 2.95m, an uplift of 18%! This clearly has massive benefits, allowing you to buy a bigger property, or in buy in a better location.
