With rental rates still rising, now could be a good time to buy. But if you have never purchased property before in this market, where do you start?

1. Budget for deposit and fees

Figuring out a budget should be your first step to buying property in the UAE, according to Warren Philliskirk, director of Mortgage International in Dubai.

However, the deposit is not the only cost that requires cash. There are a number of fees which have to be paid. “You need to be fully aware of all of those,” he says.

Generally, if a property is valued below AED 5 million, the minimum deposit banks require is 25 percent. Then you have to add approximately another 7.25 percent to cover all of the fees, such as to the agent, the bank, the Dubai Land Department in Dubai’s case or the developer elsewhere in the emirates, says Mr Philliskirk.

2. Secure mortgage pre-approval

Next you should secure a mortgage, he adds. If you don’t, agents will be reluctant to show you round and you may miss out on a sale to a cash buyer who can move faster. [Compare mortgages]

To secure approval, buyers have to provide banks with a list of paperwork, which generally includes:

  • Salary letter from your employer
  • Any salary slips you receive
  • Six months of bank statements
  • Passport copy with both a photo and visa page
  • Copy of your Emirates ID
  • Copy of current credit card statements
  • For some lenders, proof of address.

The process with the banks is the same across the emirates. However, the transfer fees are different depending on where it is. In Dubai the property transfer fee is four percent, whereas in Abu Dhabi, for example, the rule of thumb is two percent, says Mr Philliskirk.

Expect the mortgage pre-approval stage to take between five and seven days for salaried borrowers. For those who are self-employed, it is longer.

3. Organize insurance and find your property

It would be wise to start the life insurance process at this stage too. It is mandatory for almost all lenders and will take around three weeks. Mr Philliskirk suggests seeking an outside provider for life insurance, which is generally 20 to 30 percent cheaper.

Buildings insurance, which is a precondition for all mortgages, can usually be taken out in-house with the lender as they tend to be the same price.

“Once you have pre-approval you can start looking at individual units,” says Mr Philliskirk. “Don’t just look at the prices. Look at the maintenance costs. Ideally speak to someone who is already living in the building or the development so you can get a feeling of the service costs and how it is being managed.”

[Also read: Is Dubai property market slowing to a halt? | Understanding mortgages in the UAE | 10 things you need to know about buying UAE property]

4. Sign memorandum of understanding

If you are satisfied with all that and agree on a sale, the next step is to sign a memorandum of understanding (MoU). That sets out the cost of the transaction and when it is going to take place, along with all the finer details.

This is a particularly tricky stage for the first-time buyer because a lot of the information is technical and, if you do not meet your transfer date, your deposits are at stake.

Appointing an independent conveyancing company – a company set up specifically to handle the legal aspects of a property purchase – to ensure that the details are correct will help you get through this stage smoothly, suggests Mr Philliskirk. This would probably take a day or two.

5. Valuation through to no objection certificate

Once that is all done, the buyer requests a valuation on the property, which takes around three or four days. The bank then starts drawing up the final offer contract and, once it is signed, assuming there is no mortgage on the property, the seller applies for a no objection certificate (NOC) to prove they owe nothing on the property. When the certificate is released, the buyer sends a copy to their lender and all parties liaise to arrange a transfer date, says Mr Philliskirk. The final offer will take two to seven days and the NOC three to five.

If there is a pre-existing mortgage on the property, the lender will ask the seller to produce a liability letter (essentially a settlement statement setting out what is owed) before producing a final offer letter. That will take around three to five days to produce and will be given to the buyer’s bank, which will draw up the final contract for the buyer to sign.

Once they have done that, they will take the check to the seller’s bank to pay off the mortgage and the seller’s bank will release the title deeds in seven to 10 days, says Mr Philliskirk. Once it has been collected by the new lender, the seller can then apply for the NOC. As with a property without a mortgage, the buyer then sends a copy of the certificate to their lender and all parties liaise to arrange a transfer date. Altogether this adds around 10 days to the process.

6. Transfer and title deeds

At the transfer, the bank brings the money they are providing for the deal and the buyer brings manager’s checks, a sort of banker’s draft which cannot bounce, for the balance to the seller and the Dubai Land Department, or the developer in other emirates.

“Once that happens the bank will get the title deeds, either there and then or potentially the following day – and that’s it. You are good to go,” says Mr Philliskirk. “The property is yours.”

Steps to buying property in the UAE

  • Save cash for deposit (around 25 percent)
  • Save cash for 7.5 percent fees – agent, bank, land department or developer
  • Apply for mortgage pre-approval – 5-7 days
  • Search for property and agree a sale
  • Begin to shop for life insurance – allow 3 weeks
  • Memorandum of understanding – hire conveyancing company – 1 day or so
  • Valuation by buyer – 3-4 days
  • If seller does not have mortgage – final offer contract drafted by bank, seller gets no objection certificate, sends copy to buyer for their bank – 5-12 days
  • If seller has mortgage – seller gets settlement statement/ liability letter, buyer’s bank pays off mortgage with seller’s bank, seller applies for NOC (extra 10 days)
  • Transfer date set
  • Buyer brings manager’s checks to transfer, bank brings money
  • Title deeds – transfer day or next day