How to save money for a house down payment in Dubai
Owning a house in Dubai can sometimes feel like a distant dream. However, if you plan things out and manage your finances wisely, that distant dream can swiftly become a glorious reality. The first financial hurdle house buyers are likely to face is paying the cash down payment. So to help you clear that hurdle with ease, we bring you 10 handy tips on how to save for a down payment in Dubai. Follow these steps, and you’ll soon be ready to buy that house you’ve always wanted.
WHAT IS THE MINIMUM DOWN PAYMENT ON A HOUSE IN DUBAI?
The minimum down payment on a house in Dubai is 25% for expats and 20% for locals. That means that if the price of the home you’ve got your eye on is AED 1M, the money you’ll need to put up front is AED 250,000 if you are an expat and AED 200,000 if you are a UAE national.
That’s a lot of dough! Buy the good news is there’s a broad range of affordable properties in the emirate, and if you start saving money for the down payment today, you’ll soon be able to wave goodbye to a renter’s life.
HOW TO SAVE FOR A DOWN PAYMENT?
Here are some tricks and tips on how to save for a down payment on a house in Dubai.
1. CALCULATE YOUR HOUSE DOWN PAYMENT
The first step to saving for a house down payment in Dubai is knowing how much money you will need to purchase the property. You can visit a mortgage lender, see a Mortgage Consultant in a reputable agency, or get tips from our piece on how to get a mortgage in Dubai for Expats for general FAQs on the subject.
You can even find out if you qualify for a mortgage and get an instant online pre-approval using the Bayut ADCB Dream Home platform. Search for the desired property, enter your personal details and instantly determine whether you qualify for a mortgage. It will give you an idea on how much you would have to save for your down payment.
2. DETERMINE A TIME FRAME
Once you know your exact down payment value, you’ll need to determine a time frame to save the amount. This will help you build your entire savings plan based on these numbers. Here’s what these calculations might look like:
- Five years: AED 220.80 per day
- Ten years: AED 110.40 per day
Once you have these options, work out which time frame is more feasible for you.
3. PAY OFF YOUR CREDIT CARD BILLS
If you wish to get out of the tenancy cycle once and for all, you do not want to have several credit cards chipping away at your monthly income. This is amongst the most integral steps to saving for a house down payment in Dubai. Make yourself debt-free as much as you can and focus on the future for your exciting first-time home purchase.
If your debts are high, at least try to minimise the number of credit cards. Alternatively, try setting up lower interest rates and spending as much as your pocket allows you to. Don’t go over your monthly budget and try to pay those cards off before they start claiming lots of interest every month!
4. OPEN UP A SAVINGS ACCOUNT
If you are looking for tips on how to save for a down payment on a house in Dubai, start with a savings account. Opening up a savings account with Emirates NBD and most other banks in Dubai is straightforward yet it makes all the difference. For more information on best saving accounts in Dubai, you can refer to our guide.
This will help you to mentally separate your down payment fund from your everyday spending money.
5. SET UP AN AUTOMATED PAYMENT PLAN
Our minds can easily trick us into believing that the multiple zeroes in our bank account mean we’ve got money to spare. Setting up an automated savings plan is all about removing the temptation from the equation.
If a certain percentage of your salary gets transferred to your savings account automatically, you won’t be able to go on a spur-of-the-moment trip or splurge on a second pair of premium brand sunglasses. All in all, it will make saving for a down payment much easier.
6. START BUDGETING
In our fast-moving computer age, the one thing you can do quickly is to calculate what your monthly expenses are versus how much you ought to be spending. Whether it’s a simple spreadsheet or a digital app, you can have a detailed view of your rent, utilities, car and other payments with you at all times and easily ascertain how much over the budget you’ve gone.
7. CUT DOWN ON NEEDLESS EXPENSES
Are you still paying for Netflix while you never really have the time to watch anything? Is your shirt pressing AED 4 a pop when there’s an AED 2 alternative just a few streets down the road? There are many options for cost-cutting when you live in a city that is as competitive as Dubai. Again, do a bit of research and find the most affordable options.
8. RENT A CHEAPER APARTMENT
Yes, we all want to lead a comfortable life. But the truth is that if you want to be a home owner, your total housing costs should never exceed 30% of your monthly income. So, if you want to live in a high-end community like Dubai Marina yet still wish to save for a down payment, you might need to reevaluate your choices.
9. START SAVING ON UTILITY BILLS
Yes, it might look like we’re pushing it with this one and asking you to become an altogether different person. But the truth is – if you rationalise your electricity use, buy cost-efficient devices, you’ll save a ton in the long run. You can also have a quick look at how to reduce electricity bill in Dubai. It is a cliché, but if you want to save for a house down payment in Dubai, you’ve got to be a bit conservative in your energy consumption. So, here it is: A dollar saved is a dollar earned.
10. SEPARATE THE WANTS FROM NEEDS
Lastly, to save money, you gotta separate your needs from your wants. Avoid making irrational purchases and always ask yourself if the money you’re spending is worth it in the long run. For instance, getting a designer bag might not be a good decision when you’re saving for the down payment to get your own place.
FAQS ABOUT HOW TO SAVE FOR A DOWN PAYMENT
CAN EXPATS BUY PROPERTY IN DUBAI?
Expat buyers can buy property in Dubai, but only those located in the freehold areas in Dubai. These include neighbourhoods like Dubai Hills Estate and DIFC.
I AM AN EXPAT. HOW DO I GET A MORTGAGE IN DUBAI?
Several conditions apply for expats who want to get a mortgage in Dubai. For one, you must be between 21 and 65 years old to apply for a mortgage. Secondly, you need to be a resident or a UAE national.
HOW MUCH DO I NEED TO EARN TO BUY PROPERTY IN DUBAI?
Foreign investors need to earn within specific salary brackets to qualify for home loans in the emirate. Some banks require a minimum monthly salary. However, the rate may differ from bank to bank. The eventual amount you will pay also includes the Dubai Land Department (DLD) fee, mortgage registration fee, agency fee and other payments. To better understand how this works, you can refer to our guide on the minimum salary for a mortgage in Dubai.
WHAT ARE THE DIFFERENT TYPES OF MORTGAGES AVAILABLE IN DUBAI?
Prospective homeowners can select from several types of mortgages in Dubai. Fixed Rate Mortgage, Variable Interest Rates and Discount Rate Mortgage are some of the many options.
That concludes our guide on how to save for a down payment on a house in Dubai. With some planning and determination, saving for your dream home can be easier than you’d think. And if you’re almost done saving for your house, why not have a look at the cheapest residential area in Dubai to buy a property.
