Buying off-plan is a very exciting prospect, and if you have had the patience to work through the long years of development, then the final payment and handover moment is significant. Unfortunately, for many property buyers, a lack of proper preparation can mean that this otherwise thrilling time is spoiled with worry. At Mortgage Finder we’re keen to ensure that your property handover goes smoothly and you have the right mortgage in place to avoid any delays, potential late payment fees or other problems.
Understanding the handover – what does it mean?
An off-plan purchase is an alluring prospect. Developers are keen to make sure their properties are sold and by getting in early and making part payments while the project is still in construction, the anticipation is to save a sizeable percentage of the property price in exchange for some patience.
Problems in development, including delays, can mean that you require more patience than first expected, but eventually the handover moment comes and all the waiting is over. You obtain the keys and can move in, in exchange for the final payment (typically 50% to 70%) that finishes the deal and makes the property your home.
But to enjoy a smooth handover, you need to make sure you have the money in place to pay that final payment – and that means getting the right mortgage.
The early days – planning before committing
If you have not yet moved forward with your off-plan purchase, then we strongly advise giving us at Mortgage Finder a call! Speaking with a specialist mortgage advisor before you go ahead with the project can make all the difference. We can make sure you have a suitable mortgage in place, even years ahead, and secure a pre-approval so the end handover is effortless.
Of course, with many developments in Dubai and across the UAE nearing handover dates, there are plenty of people out there that are already past that early stage and looking for the right mortgage to make that final payment – thankfully, we can help there too!
When is the final payment due?
You may think you know when the final payment is due, but check the paperwork to make sure! This will be part of your sales and purchase agreement (SPA) and having as much time to plan as possible will help. Take into account any delays that have happened, and if you have any reason to negotiate the final due date further, start considering this. Ideally, the final payment and handover occur at the same time, but you may find yourself committed to a final payment date while construction delays mean handover is not yet possible. Is your payment due on receipt of the BCC (Building Completion Certificate) or when the developer demands it? The more awareness you have of the situation the better it will be.
It’s helpful to give yourself at least six months before the handover date to start looking for a mortgage or speaking with a mortgage broker. While a mortgage can be found in a shorter period, by giving yourself a full half a year, you increase the chances of finding the best rates and you’re not left agreeing to a sub-par mortgage out of deadline concerns.
Two months ahead of the final handover, it’s important to get a solid pre-approval for your mortgage. With that in hand, the level of stress and worry will drop considerably and you’ll be able to look forward to your new property without wondering how you are going to pay for it!
Be aware when approaching the banks
When buying off-plan, in many cases you will not be provided with a title deed straight away upon handover, it can take a few months to receive this.
Not all banks will lend without a title deed and in some cases final payment is required by the developer before a title deed is provided. If the bank you have opted to take the mortgage with is unable to lend without a title deed, then this could mean you are stuck in a position where you have to pay penalty fees to the developer should you be unable to settle the final payment by the deadline.
Some banks will agree to finance a final payment but are not clear on whether they can lend without the title deed in place. It is important to check this before committing to that bank as a lender in order to avoid issues later down the line. At Mortgage Finder we know which banks are able to lend without the title deed and will always approach them as a preference to secure your finance.
The change in market value
Getting an off-plan property is not without its risks. The price you agree to at the time of contract is not necessarily an accurate reflection of its final market value once the building is complete. It could be that you have already paid 30% to 50% of the building costs to find that the actual value of the property has dropped and even a 75% LTV (loan to value) mortgage isn’t enough to cover the remainder.
A lender is unable to lend beyond 75% LTV to non-UAE nationals, so if the price of the development has dropped considerably, you may need to plan for additional funding.
Of course, the inverse is also true, and you could find yourself requiring a far smaller mortgage than you first envisioned.
Getting through the paperwork
Remember, if you are not already a resident of the UAE, then it could take longer for all the paperwork to go through than it does for those living in the country. Speak to us so that we can help you through this process smoothly and any delays don’t lead to issues with the final payment or potential late penalty fees from the developer.
You will also need all the relevant paperwork for your build to finalise the mortgage; this includes the BCC and handover letter, so if delays in construction mean this paperwork is unavailable, it could spell problems for the mortgage – though pre-approval will show your developer that you have the funding available and help allay their concerns.
How Mortgage Finder can help
At Mortgage Finder, our team of specialists understand all the finer nuances of off-plan purchases and can help you with getting the right mortgage at the right rate. We are specialists in dealing with both resident and non-resident mortgages so we will make sure your application has minimal delays.
Give Mortgage Finder a call today for more information, or fill out our simple form to have someone contact you at a convenient time. We’ll get you over that final payment hurdle and the keys to your brand new home will soon be yours!