In fact, nowadays mortgage advisors are calling residents advising them to apply for a home loan as interest rates are low, a mortgage cap is likely and prices are increasing.
Barring a few property consultants, investors are often not provided with a list that details the documents and the process that a buyer needs to follow when purchasing a home on mortgage.
In most cases, banks and developers unexpectedly ask for additional documents, which add to the buyer’s anxiety and leads to delay in the transfer process.
Generally, a Memorandum of Understanding signed by the buyer and seller, gives a one-month period to complete the transfer or else the seller has the right to forfeit the deposit money.
George , who bought a one-bed apartment in Jumeirah Beach Residence, said: “It was in January this year that I decided to buy an apartment as I planned to stay here in the emirate long term. After having decided my budget and finalising an apartment through a property agent, I approached a local bank for mortgage.
“My property agent told me that I would not take more than three weeks to close the deal and for me to get the title deed. That was not the case since there were a number of documents required by the bank and the developer.”
George says: “Had I been given a proper list of documents by my agent, the process would have been an easy one.”
Following is the process for homebuyers looking to take out a mortgage.
The first step is to take a pre-approval from bank.
The documents required are:
* Passport copy and visa page
* Salary certificate addressed to the bank
* Latest six months’ bank statements from the personal account
* Details of all liabilities
* Copy of title deed with floor plan
The bank issues a pre-approval letter in three to five working days.
Sign Memorandum of Understanding (MoU) with the seller The buyer and the seller along with their respective agents sign a MoU, which states the time for completing the property transfer. The buyer generally issues a 10 per cent down payment cheque in the name of seller that is held by the seller’s agent. It is cashed only if the buyer backs out of the deal.
Apply to get the final approval letter from bank The buyer then needs to send the following documents to the bank to obtain a final approval letter.
* Passport copy of the seller
* Signed MoU along with the receipt of deposit cheque given to the seller
Issue a cheque for valuation fee
The final mortgage approval letter is issued after the bank receives the valuation report. The process takes five working days.
The buyer will have to hand over three to four undated monthly installment as security cheques along with one cheque totaling the value of the property.
The bank will also open a savings account for the mortgagor from where it will debit the EMIs every month.
NoC from the developer
Most of the developers now want the buyer to provide then with a no-objection certificate (NoC) to the developer for title transfer and mortgage registration from the bank.
The buyer also needs to fill up a ‘know your customer’ form.
Following the submission of the above two documents, both the seller and buyer have to go to the developer’s office to apply for the NoC. After the seller pays off all his pending service charge dues, the developer issues a NoC. Generally, NoC’s are valid for 10 working days.
DLD appointment for registering transfer With the NoC issued, it is up to the bank/agent to seek an appointment at Dubai Land Department (DLD) office for registering the transfer.
The buyer will have to either take out a manager’s cheque for the down payment amount or deposit the money in the bank account, authorizing the bank to arrange for a manager’s cheque. The fee for issuing the cheque is Dh30.
The buyer will also have to take out a manager’s cheque of 2 per cent of contract value plus Dh315 as registration fee. He has the option to pay 0.25 per cent of the mortgage amount as mortgage registration fee in cash.
Both, the buyer and the seller have to be present at the DLD office on the scheduled day and time. After the officials verify all documents and the buyer hands over the registration fee cheque and mortgage registration charge, the buyer and seller sign the official document of transfer.
The title deed is issued with the bank holding the original and handing over the attested copy to the buyer.
Finally, the buyer pays the agent’s commission.
Disclaimer: The above list is only meant as a guide and has no legal or representational bearing on a mortgage provider in the UAE. Each bank follows its own procedure and may ask for additional cheques or documents.