A guide on how to sell mortgaged property in Dubai
Do you have a mortgaged property you’d like to sell but aren’t familiar with how to do things? MyBayut breaks down the steps of ‘how to sell mortgaged property in Dubai’, including applicable fees, documents required and the differences when selling off-plan mortgaged property.
HOW TO SELL MORTGAGED PROPERTY IN DUBAI?
Firstly, homeowners in Dubai will be glad to know they can sell their mortgaged property before paying off the mortgage. However, it’s important to note that selling mortgaged property in Dubai requires additional steps and can be complicated if you aren’t aware of the proper procedures.
PROCESS OF SELLING MORTGAGED PROPERTY IN DUBAI
Can I sell a mortgaged property in Dubai? We’ve got the process for you right here!
Once the seller has found a buyer, the next step is to access Form F via RERA Dubai. It is a Memorandum of Understanding (MOU) that outlines all the details and terms of the sale. After signing the form, the following steps will need to be carried out when selling financed property in Dubai.
1. APPLY FOR A LIABILITY LETTER FROM THE LENDER
The seller will need to apply for a liability letter to their bank stating the amount on the property that still needs to be paid.
2. APPLY FOR AN NOC FROM THE DEVELOPER
After this, the seller must apply for the property developer’s NOC (No Objection Certificate). This is to ensure no outstanding payments for service charges to the developer. Here’s how you can apply for NOC.
3. BLOCK THE PROPERTY IN THE BUYER’S NAME
Before the buyer clears the seller’s mortgage, another process, known as ‘property blocking’, will take place to protect the buyer. The seller, the buyer, and other parties must visit one of the Dubai Land Department (DLD) registration trustees’ offices to block the property in the buyer’s name. This will allow the buyer to clear the seller’s mortgage while ensuring that the latter cannot sell the property to anyone other than the buyer.
When blocking property in Dubai, the following documents will be required:
- Liability letter from seller’s bank
- Form F (MOU)
- NOC from developer
- Copy of the title deed
- Cheque to the name of the bank (for the liability letter amount of the purchase price)
- Cheque to the seller (for the balance amount of the purchase price)
- Cheque to Dubai Land Department (for the 4% transfer fee)
- Original passport, visa and Emirates ID (buyer and seller)
4. OBTAIN CLEARANCE LETTER AND ORIGINAL TITLE DEED
The next step in selling mortgaged property in Dubai is to deliver the buyer’s cheque to the bank. Once the seller’s mortgage has been cleared, the bank will issue the property mortgage release letter or clearance letter and the original title deed to the seller.
5. TRANSFER THE PROPERTY IN THE BUYER’S NAME
The final step in selling financed property in Dubai requires both parties to visit the DLD registration trustee’s office again to transfer ownership. At this point, the seller’s existing mortgage will be released, and a new title deed will be issued in the buyer’s name.
The following documents will be required to release the seller’s mortgage:
- Original title deed
- Mortgage release letter from the bank
- Passport, Visa and Emirates ID
The above process takes place when a mortgaged property is sold to a cash buyer.
However, it’s important to note that if the buyer is also mortgaging the property, the selling process will likely take longer, as the seller’s mortgage is only cleared after the buyer’s bank gives final approval on the loan.
The property blocking process will not be required as the original title deed will be released to the buyer’s bank after the mortgage is settled with the seller’s bank.
PAYABLE FEES TO SELL MORTGAGED PROPERTY IN DUBAI
Here’s a brief breakdown of the fee you must pay when selling a mortgaged property in Dubai.
Services | Fee |
|---|---|
Services Registration | Fee AED 1,000 |
Services Knowledge Fee | Fee AED 10 |
Services Innovation Fee | Fee AED 525 |
Services Mortgage Release Procedure | Fee AED 1,290 |
Services Fee for Registrar to Release the Mortgage | Fee AED 315 |
Services For a Land Map of Lands Outside of the Jurisdiction of Dubai Municipality | Fee AED 100 |
Services For a Land Map of the Unified Map at Dubai Municipality | Fee AED 225 |
Services For a Plan of Building and an Apartment | Fee AED 250 |
Services Title Deed Issuance | Fee AED 250 |
Services For Each Drawing | Fee AED 10 |
Services Mortgage Fee | Fee 0.25% of the Total Mortgage Value |
Please note that the fee for registering with the Registrar for the sale will be made according to the property’s value. If the property price is less than AED 500k, the fee will be AED 2,100.
And if the property price is greater than or equal to AED 500k, the fee will be AED 4,200. However, the Registrar’s fee is exempted when a mortgage is registered on the same day.
HOW TO IMPOSE THE RESTRICTION ON MORTGAGED PROPERTY IN DUBAI?
As per the procedure mentioned on the DLD’s website:
- Go to one of the Real Estate Registration Trustee offices.
- Submit the required documents to the employee.
- Get the transaction data verified.
- Pay the fee and receive a receipt.
REQUIRED DOCUMENTS
To restrict a property in Dubai, you must submit the following documents.
- A debit certificate or a letter from the developer with the remaining amount.
- Power of Attorney, if an individual is appointing someone on their behalf.
- Emirates ID Card of the buyer & seller, a copy of a valid passport (Non-residents).
- Manager’s cheques:
- In the name of the developer or bank with the debt amount
- In the name of the seller with the remaining amount
- In the name of Dubai Land Department with 4% as sale fees
- In the name of Dubai Land Department with AED 1,020 as Restriction fees
FEE TO BLOCK A MORTGAGED PROPERTY IN DUBAI
Here is a breakdown of fees that you must pay to only block a mortgaged property in Dubai:
SERVICE | CHARGES |
|---|---|
SERVICE Property Blocking | CHARGES AED 1,000 |
SERVICE Knowledge Fees | CHARGES AED 10 |
SERVICE Innovation Fees | CHARGES AED 10 |
SERVICE Trustee Registration | CHARGES AED 500 |
Please note that the aforementioned fee structure is only reserved for restricting the mortgaged property and doesn’t cover all the costs of selling a mortgaged property in Dubai.
CAN I SELL MORTGAGED HOUSE IN DUBAI THAT IS OFF-PLAN?
Regarding off-plan property under the mortgage, it is recommended to check with the developer. Ensure that the owners are allowed to sell the property. Developers may have policies restricting off-plan property from being sold before a certain percentage of the payment plan has been paid off. This can vary between developers. Thus, checking before you sell your off-plan property under a mortgage is essential.
You may also require an additional no-objection certificate from the Dubai Land Department (DLD) when selling financed property in Dubai that is off-plan. There may also be a difference in the associated costs and fees when selling mortgaged off-plan versus a ready property.
Please remember that there may be additional charges applicable on a case-by-case basis.
FAQs
CAN I SELL MY PROPERTY IF I HAVE A MORTGAGE?
Yes, you can sell a house with a mortgage in Dubai. The sale process involves using the proceeds from the sale to pay off the outstanding loan balance.
WHERE CAN I REGISTER THE SALE OF A MORTGAGED PROPERTY?
You can register for the sale of a mortgaged property in Dubai via the official website of the Dubai Land Department (DLD).
HOW TO CALCULATE MORTGAGE PAYOFF WHEN SELLING A HOME IN DUBAI?
To calculate your mortgage payoff when selling a home in Dubai, you’ll need to contact your lender for an updated payoff amount, which includes your remaining loan balance, interest accrued up to the payoff date and any early settlement fees that may apply. You can also use the ADCB mortgage calculator to get an idea.
CAN I SELL MY HOUSE BEFORE PAYING OFF THE MORTGAGE?
Yes, you can sell your house in Dubai before paying off the mortgage. The sale process involves using the proceeds to pay off the remaining balance of your mortgage. Typically, you’ll need a liability letter from your lender, which details the outstanding loan amount and any early settlement fees. Once the buyer pays the agreed price, the lender is paid first, and any remaining amount is transferred to you.
WHAT HAPPENS TO MY MORTGAGE WHEN I SELL MY HOUSE?
When you sell your house in Dubai, your mortgage must be settled as part of the sale process. Once a buyer is found, you must request a liability letter from your lender, which specifies the outstanding mortgage balance and any early settlement fees. At the sale’s closing, the buyer’s payment will first go towards paying off your mortgage.
The remaining funds will be yours if the sale price exceeds your mortgage balance. After the mortgage is fully paid, the property title is transferred to the buyer and your mortgage is closed. You may need to cover the difference if the sale price doesn’t cover the mortgage.
This wraps up MyBayut’s guide on can a mortgaged property be sold in Dubai. If you are looking to buy a property with a home loan, you might also benefit from reading about how to get a mortgage in Dubai.
Furthermore, prospective sellers must also know about the cost for selling a house in Dubai.
It’s also essential to understand more about the minimum salary for mortgages in Dubai to make an informed financial choice.
You may also be interested in reading up on our guide to selling off-plan property in Dubai, which details everything you need to remember if your property is still under construction.
Or, if you want to take advantage of the reduced early settlement fees, look at the types of mortgages available in Dubai right now! If you plan to invest in real estate soon, consider all the associated costs and fees for buying a property in Dubai!
Stay tuned to MyBayut to learn more about the real estate market in Dubai.
