Tips on how to save for your down payment

There’s no getting around the need for a down payment when it comes to buying a property in the UAE. Unlike some areas of the world, there are no 100% mortgages here! Expats are required to have at least a 20% down payment, and UAE nationals need 15%.

The good news is there are many ways you can look to source your down payment, which we have covered here. However, for many buyers it is often necessary to have to save for some part, if not all, of the down payment amount.

So, how can you do this?

Tip 1 – Cutting unnecessary spending

“Spend less money,” may seem like an obvious comment to make, but it does remain the core of all good saving principles, especially if you are looking to make a long-term investment such as a for a property.

Most people really don’t realise how much they spend every month on things they simply don’t need. Our modern society has moved over the last twenty years to a strong subscription model, where a large number of seemingly-irrelevant payments for entertainment and other frivolous activities automatically come out of our current accounts without being noticed. Whether it’s a payment for an online music subscription or an unused gym membership, they all add up – often to thousands of dirhams a month.

And it’s not just the small regular purchases, other things, such as car finance or eating out, can really make an impact on the monthly bills.

Consider downsizing your luxuries and entertainment. Once you have moved past the need to pay for your essentials, try to make it so there’s nothing else going out – or at least, restrict yourself to an absolute minimum.

One simple helpful way to do this is simply to spend the time listing out everything you spend on a regular basis – often the shock itself of the flood of outgoings is enough to spark change!

Tip 2 – Automate saving

Remembering to put some money aside is harder than it looks. Setting up a standing order from your bank account into your down payment fund is a key way to make sure the money is transferred without you having to think about it.

Also, remember, you don’t need to have the money go out all at once. If your finances are such that two smaller regular outgoings each month are easier to handle than one larger one, then do so.

Tip 3 – Downsize

Buying a house is not only a financial investment, it’s also a long term home and one that you may have to work to achieve. Living in a less desirable area or choosing a smaller house to rent in the short term while you build up the down payment is a small price to pay for the eventual joy of your own place.

When choosing your rental property, try to budget as low as you can to maximise your savings, even if that means having children share a room, or going without a sea view for a while!

Tip 4 – Find the right savings account

Not all savings accounts are the same. Not only are there different interest rates, but there can be huge variety in the terms on how you access your money, investment-tied bonuses and other help. Remember that your money doesn’t have to be saved in the UAE, but that you can take advantage of worldwide savings offers.

Just be careful when it comes to exchange rates in the final days – you don’t want to lose thousands because of a fluctuation between your saving currency and the dirham.

Putting your money in a standard savings account isn’t the only way to get some interest on the money – many options exist for investment, and online peer-to-peer saving and investment can offer a high return on your capital.

Remember, however, that investing your money does come with risk. It’s worth speaking to a professional financial advisor to discuss your feelings and risk levels and find an opportunity that is right for you.

Tip 5 – Sell, sell, sell!

Over the years, many of us collect a large amount of stuff. Whether it’s an array of clothes or a set of film star autographs, it’s amazing what can be found that has more value to someone else than it still does for you! Online auction sites and specialist marketplaces mean that selling your items is easier than ever and a little effort can yield incredible rewards.

Decluttering in this way also gives you a positive fresh start on life, and you will find yourself moving into your new home with a bright outlook – not to mention the fact it’ll take less time to unpack!

Tip 6 – Budget well and give it time

There is no better friend to anyone trying to save than time. If you set yourself a strict monthly budget and stick to it, then as time passes you will continue towards your goal.

Once you become used to a fixed budget, it is easy to keep on track. Every now and then you might slip off, and spend a little more than you intended, but it will all even out as the months go by and your saving fund continues to grow.

Getting your mortgage with Mortgage Finder

Of course, one of the other things you will want to do is get your hands on the best possible mortgage deal out there once it is time to buy! At Mortgage Finder, we work with a range of lenders across Dubai and the UAE, making sure that we can get the best mortgage products to you. Speak to us as soon as you begin your journey to buying a new house and we’ll help you understand how much you need to save and the properties that may one day be yours.

Fill in our contact form or pick up the phone and call today!