Purchasing an off-plan property requires time and patience. After waiting for your property to be built, you want to be ready for your handover payment and have everything ready to finalise your purchase. If you're funding your handover payment with a post-handover payment plan, here’s what you need to do to be prepared and get the keys in your hand as soon as possible!
But first, what is a handover payment?
A handover payment is the final payment you make to secure your off-plan property purchase. In the UAE it’s normally 50-70% of the property price. And, it’s likely, you will need a mortgage to finance this cost.
But, there is a lot to prepare for prior to the handover payment date. We’ve put together 4 tips to help you through the process with the least amount of stress.
4 tips to prepare for the handover payment:
Understand your timeline
Handover payments can sneak up on you, and if you haven’t started preparing for it in advance you could find yourself crunched for time. If you’re planning to finance your handover payment with a mortgage you will need to give yourself plenty of time to find the right mortgage for you and for the bank to process all your documents. It’s good practice to give yourself at least a 2-3 month window in order to complete the mortgage process. If you run into any issues you’ll have time to solve them and still get your payment in on time, avoiding any late payment fees to the developer. Make sure you have checked the agreed-upon date for the handover in your contract, so you know what date you’re working towards.
Be prepared for market value changes
Buying off-plan comes with risks, as does any investment. Your property’s valuation, which is agreed on at the beginning of the process, may not match the final market value when construction has been completed.
If the final market value of your purchased property when completed is less than the original valuation and you are financing the handover payment with a mortgage, then your up front payment might be higher than what you had planned for.
On the other hand, if the final market value is higher than the property’s original valuation you may have a lower down payment than expected!
Also, you should take into consideration the UAE has a cap of 80% LTV (loan to value ratio) for residents of the UAE and 85% for UAE nationals, so if the value you need to borrow increases above 80%-85% LTV you will need to fund the difference out of pocket.
Speak to an expert
As with any big financial decision, it’s wise to consult a professional. For financing the handover payment, we recommend using a mortgage broker. A mortgage broker will know the nuances of funding an off-plan handover payment and will be able to find you the best mortgage for your specific needs. They will also have a deeper understanding of the time it takes to go through each stage of the process, so best to consult them early on (see point 1!).
Get a pre-approval
A mortgage broker will also guide you through the process of getting a pre-approval. A pre-approval will tell you, and your developers, what the banks are willing to lend you. Pre-approvals are normally valid for around 60 days, so you have a little breathing room. It is also a great way to give you peace of mind, as you get close to the handover payment! You can read more about pre-approvals in our blog ‘What is a mortgage pre-approval?’