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What does freehold mean in the context of Dubai? |
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As it stands, freehold means ownership of the building you are buying in perpetuity. Dubai's Government does, however, need to produce a law that defines the legal terminology specifically for Dubai, just as Abu Dhabi Government has recently done for Abu Dhabi. At the moment, freehold (or leasehold, depending on what you are buying) exists in contract with the primary developer - the quasi-Dubai Government entities called Nakheel, Emaar and Dubai Holdings. The good news is that legal consultants say a new law is in the pipeline. It is almost certain that no law will allow foreigners to own land as freehold - this will likely remain with the primary developers, and has happened in the few cases where title has been granted to foreigners. This is no cause for alarm though, as it is one method of several applied in Europe and United States, for example. |
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What's the difference between a standard mortgage and Islamic Mortgage? |
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Very little. An Islamic mortgage doesn't allow interest to be charged, but you still pay the bank a fee or profit, or both over time, for the property to become yours. Look at both options as there are differences in terms of payment amounts and ownership rights that may be useful to your personal circumstances. |
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What's a transfer fee? |
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A transfer fee is payable if transfer your property to someone else. It is an administrative charge levied by the primary developer. |
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Do you get a residency visa if you buy a home? |
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Generally speaking, the answer to this question is yes, but your contract should state that you are entitled to one. Residence visas are subject to normal immigration regulations, which means that they are renewable every three years, for example. They do not replace a work permit, and if you have a work permit. Your residency will come from that. They do not confer special status, so be good. |
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Is it possible to get permanent residency? |
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There is no such thing as permanent residency in the UAE unless specifically granted by a member of the ruling family. |
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Should you write a will when buying in Dubai? |
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Anybody purchasing property in Dubai (or anywhere) should get a will once they have bought. It means your estate can be properly distributed in accordance with your wishes, and according to the laws of the country you elect as your jurisdiction, thus avoiding any conflict with local law. |
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Can freehold property be transferred to an offshore company? |
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Yes an offshore company vehicle can be used to hold property, and sold in order to sell the property. If you do not want to be on the deeds, you will need to appoint a nominee, although this may mean it is the nominee who is given residency, not you. |
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Is it possible to get mortgages for property in Dubai? |
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Yes Amlak, Tamweel, HSBC, Lloyds, MashreqBank, RAKBANK, National Bank of Dubai, United National Bank, Arab Bank, Abu Dhabi Commercial Bank, Standard Chartered Bank and United Bank Ltd (Pakistan) are just some of the banks that lend on Dubai property, both on and off-plan. Each one has different rates and terms, and some only lend to residents. You can also now get mortgages internationally for property in Dubai. HSBC I the UK, for example, will lend asset backed mortgages against a property you own there. Other banks are starting to do the same. |
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How do mortgages differ from those abroad? |
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Firstly, lenders do not lend on every project currently being built. Often buildings are sold that no one leads on at all, but given the favorable payment structure system in Dubai, that doesn’t mean they aren’t worth buying. On the other hand, it is possible to get a mortgage on many off-plan properties, unlike most places in the world. |
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What are mortgage rates in Dubai? |
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On the whole, and in comparison with international rates, rates are considered to be expensive at between 6-8%. But these are not asset backed as they would generally be were you to get a mortgage for a Dubai property somewhere else in the world. Mortgages in Dubai depend on your income as the main factor. |
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How quickly can I get a mortgage? |
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Some banks are claiming that they will give you an offer in under a week. Do not assume this is the case though. It is almost unheard of, and you should expect at least two weeks. |
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Can I get a pre-approved mortgage? |
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Yes, this is preferable and is the way to go. Most lenders will work out how much they are likely to lend you before you have a specific property in mind. This means you can then go shopping, and find something you know you can afford. It means fewer surprises, and less heartache. |
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How do local finance houses assess mortgage? |
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Your monthly income, less expenses, and then generally divided by three. This gives the figure they will work from, for each month over the term. They do not base it on how well the asset might perform, and do not allow for low-loan-to-value (ie large down payment with small loan). This system makes it frustratingly limited because even if you are earning a seriously good wage, do not assume that a bank- any bank for that matter- will lend you substantial sums. Always check whether the property you are buying has a lender, and always check whether they will lend to you. |
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How much can I borrow? |
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Resident expatriates can generally borrow between 70-80percent, non-residents can generally borrow 60-70 percent. It all depends on the lender, and the project they are lending on. |
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What do I need to show mortgage firms to get finance? |
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You will need to show proof of residency (though usually it doesn’t matter where that is-it just changes how much you have to stump up as a down payment – see below). You will also have to give proof of income details. For the employed, this means proof of employment, and six months bank statements. For the self- employed, it generally means three years audited accounts. |
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