Time and patience are two of the most important requirements when you are purchasing an off-plan property.
If you are waiting for your property to be built for a long time, then it is sure that you would not want to wait at all after it is built to be ready for your handover payment. You will also not want to wait at all to finalize the purchase of your property and get the keys to it in your hands as soon as possible.
So, if you are getting ready to get the keys in your hand by funding your handover payment with the help of a plan for post-handover payment, then here are five tips to help you get prepared.
Before moving on to tips for you to prepare for your handover payment, you need to understand what handover payment is. The final payment you make to secure the purchase of your off-plan property is a handover payment.
Generally, in the UAE, the handover payment is 50-60% of the original price of the property. It is very likely that you will need to get a mortgage to finance this handover payment.
But there is a lot more than just the mortgage when it comes to being prepared before the date of the handover payment. Here are five tips to help you get prepared to make the final payment without any tension and stress.
5 Tips to Help Prepare for Your Handover Payment
1. Be Aware of Your Timeline
It is very likely that you can forget about the handover payment, and they can sneak up on you. So, this is a reminder for you to start prepping for your handover payment in advance. If you do not start getting ready to make this huge final handover payment, you can find yourself lacking time to arrange the payment.
If your plan to pay the handover is by getting a mortgage, you need a lot of time to find yourself a mortgage plan that works for you and submit the documents of the mortgage and the other documents to the bank. Official processes take time, so carrying some extra time on your hand will do you good.
A minimum window of 2-3 months is very important for you to begin and complete the mortgage time. This time period also gives you some extra time if you run into any troubles during the mortgage process. This time period will allow you to complete the mortgage process despite any problems you might run into.
So, make sure that you are aware of your timeline and do not end up having to pay any late fees for your handover payment to your developer. Keep track of the date that has been agreed upon to make the handover payment and work towards being punctual.
2. Market Value Changes
The valuation of your property that was decided on beforehand between you and your developer might not be the same as the property’s final market value after the construction.
So, it is vital that you are prepared for market value changes before the handover payment after the completion of the construction. If the final market value of the property after the construction is finished ends up being lower than the original valuation of the property.
Also, if your handover payment is being made with a mortgage, then the up-front payment that you have to make can end up being higher than what you actually prepared yourself for.
If the final market value of the property ends up being higher than the original valuation of the property, you might just end up with a lower down payment than you expected it to be.
Another thing you should take into consideration is that the loan-to-value ratio (LTV) in UAE has a cap of 80% for the people who are residents of the UAE. The people who have UAE nationality have a cap of 85% on the LTV ratio.
A cap on the LTV ratio means that if the amount you are borrowing turns out to be higher than 80%-85% LTV, then the difference above the percentage has to be funded by you from your personal stash.
3. Get Expert Advice
It is smart to make sure that you consult an expert before making any big financial decision. So, when trying to prepare for your handover payment by financing it with a mortgage, you are advised to consult a Mortgage Broker.
A Mortgage Broker is an expert when it comes to mortgages. They will know all the technicalities that go on behind funding your handover payment with a mortgage. Their expertise will help you in finding the best mortgage deal as per your needs and preferences.
They will also help you in finishing the mortgage process with the bank as swiftly as possible. You should consider consulting a Mortgage Broker early on since they will have a much deeper understanding of the patience and time it takes to go through each mortgage process stage.
4. Get a Pre-Approval
Another thing that the Mortgage Broker can guide you through is applying to get a pre-approval. This will tell you and your developers the amount that the banks are willing to lend you. The validity of pre-approvals is usually 60 days so that you can have some time to prepare. These are a great way to relieve tour stress when close to the handover payment date.
5. Prepare a Backup
There can never be enough guarantee when it comes to banks and mortgages. So, try and make sure that you have a backup plan for your handover payment in case your mortgage falls through.
These are some tips to guide you through a handover payment and make sure that you get the keys to your house as soon as possible.