Owning a house is a ‘long term’ dream for many of us, but it can be done much sooner in your career than you think. Investing in real estate doesn’t just have to be for the rich. Here’s how low and medium income earners can start investing.
Have realistic expectations
As you are buying a property on a very strict budget you need to be realistic with your expectations. This means that as a low income earner there’s no point in buying a property that costs over AED 2 million if you are earning around AED 140,000 a year, as this will put you at a greater financial risk, plus the likelihood of being approved a loan by a lender is very low. Start off small, and take things from there.
Talk to financial experts and mortgage brokers to get an idea of what you can afford to buy.
Go for off-plan property
Low income earners should take advantage of the lowest entry prices, and one great way to do that is to buy property off the plan. Developers usually offer between 10 and 30 per cent lower prices for off-plan and under-construction properties. The closer to completion, the higher the price (typically) becomes. As settlement tends to be more than a year to two years away, this gives you additional time to save up a larger deposit, or to pay off any debts or save up for a rainy day. Off-plan property developers also offer lucrative offers and payment plans, such as 50 per cent during construction and 50 per cent at completion.
Secure a loan
In order to be approved for a home loan as a low income earner, you have to play your cards right and show evidence of financial discipline. Almost all banks in the UAE offer lucrative offers on home loans. Do a thorough research before you take a decision.
Make a larger deposit
The chances of being approved are much higher if you borrow less and put down a larger deposit. This is to show the lender that you have genuine savings for your home loan.
Reduce your current liabilities
The less debt you have against your name, the more inclined the lender will be to approve your application. If you have any outstanding debt, contact the lender or provider that you owe funds to and set up a payment plan. If you have multiple credit cards or loans, try consolidating them into a single card/loan.
Compare competitive home loans
The home loan market is competitive in the UAE, so both the banks and the types of loans they offer vary greatly. Investment loans with minimal ongoing fees, attractive features and low interest rates. When you compare home loans, keep an eye out for features such as minimal outgoing fees and low interest rates, and especially for an offset facility and the ability to make additional repayments without penalty, as these could help you reduce the interest payable over the life of your loan.
For more information about buying and renting properties in the UAE, visit https://www.zoomproperty.com/