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?
For properties worth up to AED 5M, the minimum down payment for expats is 20% and 15% for UAE nationals. For properties worth more than AED 5M, the down payment registers at a minimum of 30% for expats and 25% for UAE nationals.
That’s a lot of dough! But 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.
Disclaimer: Please note that the down payment percentage may vary depending on the applicant’s profile and individual bank policies.
How to save money for a house down payment in Dubai
Here are some tips on saving 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, meet 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 of how much you need 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. For example, the property you want to buy costs AED 1M and you need to save AED 200k (20% of 1M) for downpayment, here’s what these calculations might look like:
- One year: AED 547.9 per day
- Two years: AED 273.9 per day
- Three years: AED 182.6 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 one of the most integral tips to save money for a 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 saving for a down payment on a house in Dubai, how about creating a savings account? Open a savings account with one of the banks in Dubai that offers fixed deposits – this way, you can collect interest after a period of time. Easy-peasy!
Check out our guide to the savings accounts in Dubai for the best interest rates you can find. This will help you separate your down payment fund from your everyday spending money – and get you some extra cash.
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 will be making sure you’re saving money without having to do the math.
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 UNNECESSARY EXPENSES
Are you still paying for Netflix while you never really have the time to watch anything? Dining in restaurants while you have food at home? There are many ways to cut down expenses when you live in a city that offers as many cheap alternatives as Dubai.
For example, instead of grocery shopping at your local grocer, head over to hypermarkets like Carrefour or LuLu that offer great discounts on food and basics. Avoid going out unless you absolutely have to. Saving money needs commitment!
8. RENT A CHEAPER APARTMENT
If you want to be a homeowner, your total housing costs should never exceed 30% of your monthly income. So, living in a high-rent area like Dubai Marina while saving for a down payment might not work unless your salary can balance this saving out.
We’d suggest renting an affordable apartment in Dubai and saving up on your rent – there are a number of areas, such as Dubai Silicon Oasis and Al Warsan, that are easier on the wallet.
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 if you really plan on saving up for a down payment in Dubai, you should be mindful of your electricity use and buy cost-efficient devices.
We have an in-depth guide on how to reduce your 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.
10. SEPARATE THE WANTS FROM NEEDS
Lastly, to save money, you have to 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 place.
FAQS ABOUT HOW TO SAVE FOR A DOWN PAYMENT
Are there any specific savings accounts in Dubai that offer better interest rates for house down payments?
First Abu Dhabi Bank has an iSave account, which offers about 5 per cent interest for deposits above AED 500k. If you plan on depositing more than AED 500k, this is a great way to get your interest. Other options are Emirates NBD and Mashreq, with around 2 per cent interest.
What are some effective ways to increase my income to save for a down payment?
There are two ways to can increase your income to save for a down payment. The first is to find a job that pays a higher salary than your current role, as job switching can help you negotiate for higher pay.
Another way to increase your income is through passive income streams. Drop shipping, freelancing, and Forex trading are some options, although you’d need proper licensing to do them in the UAE.
CAN EXPATS BUY PROPERTY IN DUBAI?
Expats can buy property in Dubai, but only 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 of AED 15k. However, the rate may differ from bank to bank.
The eventual amount you will pay 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. Discover more tips to buying a home in the UAE with MyBayut, the region’s biggest property blog.
