Abu Dhabi has added another layer of flexibility for property investors – up to 50% mortgage financing for off-plan properties.
Traditionally, off-plan properties have payments in phases before, during and after construction, with mortgage possibility after they are handed over. The capital's latest regulation will qualify buyers who have already paid at least 50 per cent of the purchase price to apply for a mortgage to finance the rest.
Aldar is the first developer in Abu Dhabi to complete mortgage financing on an off-plan property for its customers through Abu Dhabi Real Estate Centre’s newly launched framework.
But is mortgage a good debt? For people who manage money effectively, debt is simply a tool in the wealth creation process. Therefore, financial experts agree that, in its simplest form, a mortgage is neither good nor bad.
A mortgage can help when property buyers want to keep their cash reserves intact or want to use the amount for other investments. In many cases, the real estate investment is expected to generate enough income or capital appreciation to cover the cost of the mortgage.
When buying a property using bank financing, the buyer should focus more on affordability and reasoning, rather than future value of the asset. As our expert columnist Mario Volpi puts it: "A home shouldn't have to justify itself purely through capital appreciation."
He repeats in several of his columns that a mortgage or a home investment in cash should be something that makes financial sense in the long term.
Is there a personal finance topic you’d like us to write about? Email me at dcheriyan@thenationalnews.com.
Dona Cheriyan, Digital Platforms Editor
From salary to self-employed: Weighing up the cost of freelancing in the UAE
“One of the biggest misconceptions people have is that freelance income is all take-home pay,” says Shazia Bharuchi, a Dubai-based career coach. “That mindset has to change.”
In the UAE, where the self-employment infrastructure has grown considerably in recent years, the entry price for the necessary legal work starts at a few thousand dirhams for those already holding a valid residence visa, and climbs past Dh40,000 for a first-year full set-up with a business licence.
Moving from employment to self-employment shifts a queue of costs previously covered by an employer to the individual: health insurance, marketing and branding, professional development, software subscriptions, equipment, workspace and accounting.
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