Huspy logo

Mortgages


Properties


Partners


Should I buy or rent?

So what’s the best choice for you? We’ve put together a quick guide on buying or renting a property in the UAE to help you decide.

Good question! Renting is a huge expense, and will amount to approximately 40% of your salary if you live in Dubai. But there are many extra fees you have to pay when buying a property and a big down payment you have to save for.

So what’s the best choice for you? We’ve put together a quick guide on buying or renting a property in the UAE to help you decide.

How long do you plan to stay in the UAE?

First things first...review your short-term plans. Are you planning to spend at least the next 5 years in the UAE? With everything that’s involved, you need to ask yourself if you’ll be here long enough to justify going through the mortgage process and all the extra costs that come with buying a property.

If you’re planning on staying a couple of years, or are simply unsure about your plans, then renting might be the better option. It gives you greater flexibility, more freedom, and means with 3-months notice you can be off on your next adventure.

How are your finances?

Are you in a stable job? Do you have a steady source of income? If so, then you might be in a position to buy a property. However, saving enough money for the down payment (minimum 20% for expats, 15% for UAE nationals) can be a big ask, even for people who are on a good salary.

Pros of buying a property

Flexibility in payment. With a mortgage, there is lots of flexibility. Choose the repayment type, length of the loan, and make extra payments when it’s possible.

Household modifications. If you own the property...you can do whatever you want to it. Extensions, redecorate, make repairs. Your house is your playground!

Asset appreciation. Property typically appreciates in value over time, meaning in 10 years it will likely be worth more than when you bought it for.

Downfalls of buying a property

Downpayment. For properties under 5M, UAE nationals need a minimum down payment of 15% of the property value before getting a loan. That increases to 20% if you are a UAE resident (expat). This likely means you’ll need to spend a few years saving.

Interest. Great, you own a house...but with every monthly payment, you’ll be paying interest too. Over 25 years (the maximum mortgage term you can get), that can add up.

Fees. Broker fees, registration fees, valuation fees, product fees. Overall, property investors can expect to pay about 6-7% of the property price in upfront costs.

Pros of renting

Flexibility. Don’t like your new flat? Too expensive? You can give notice and be out of there and find a better or cheaper one without any hassle.

Maintenance. Your landlord takes care of maintenance issues which means less work for you and no DIY jobs around the house.

Downfalls of renting

No assets. Comparing a renter vs a buyer after 10 years, the renter is worse off. They don’t have any asset equity and have not benefited from asset appreciation, which they could potentially use to upgrade into a bigger, more expensive home.

Moving. One of the biggest headaches of renting. The never-ending cycle of moving from one place to another. Buying allows you to settle in one place for the long term.

Bottom line

Deciding what to do isn’t easy, and it depends very much on your personal and financial circumstances. The good news is that if you are looking to buy, give us a call.


Written by Huspy Team

Published on 2 June 2021

Home buying made simple

About us
Careers
Blog


Huspy logo

7th Floor, The Bay Gate,

Business Bay, Dubai

United Arab Emirates

PO Box 6769, Dubai

Trade Licenses: 2489 and 584276

RERA License No. 19498