Purchasing a home in Dubai is a major milestone but also a huge financial commitment. While a mortgage makes it easier for many people to afford a home in Dubai, a significant amount is still required for the down payment. Saving that much money requires some time and effort. For anyone with limited monthly income, saving for down payment may mean serious changes in the way they spend and save their money.
In this guide, we will share some smart tips to save money for a house down payment in Dubai. Before we delve into the saving tips, it is important to get an understanding of how much you need to save for down payment in Dubai.
How Much Do You Need to Save on Down Payment
The value of a down payment varied for expats and locals living in Dubai. The minimum down payment on a house is 25% of the total property value for expats and 20% for nationals. Given the prices of properties in Dubai, it can be a huge amount of money.
You can browse through a wide range of properties for sale in Dubai and you may find a suitable house for yourself.
Tips on How to Save Money for a House Down Payment
Lets take a look at some tips and tricks that can help you save for the down payment.
Set a Time Frame for Saving
If you do not have any other investment or finances, another option is to save money for the down payment. Set an exact time frame to collect the money and divide it into equal halves. In this way, you will be able to save some amount on a monthly basis.
For instance: if you have to purchase a home after a year and the down payment is around AED 5000, you have to save AED 13/day.
Set your Budget
Once you have estimated the time frame of your savings, set your monthly budget. Budgeting will clearly differentiate between your needs and wants. Hence, you will be able to spend on items that are necessary for you. For this, first prioritise your expenses, like paying rent and utilities.
If you are having difficulty in budgeting for yourself, you can use online calculators and apps for this purpose.
Look for Savings and Investments
To pay the down payment of the houses you can also use any investments or inheritance outside the Emirates. To transfer these investments, it is suggested to use authentic money transfer services in Dubai. The money exchanges are better in terms of taxes and charges contrary to banks in the region.
Pay Off Your Credit Cards
Once you have set your time frame, the next step is to avoid using credit cards. The cards are feasible for purchasing items on credit, but it increases the debt and can impact the monthly savings. To make yourself debt-free is one of the most essential steps in saving money for down payments.
If you are not able to pay off credit cards completely, at least try to cut off their excessive usage. Alongside, try to opt for a credit card with lower interest rates and avoid using it for smaller things that can be purchased on pocket cash conveniently. For more tricks, read our blog on tips to avoid debt in the UAE.
Be Frugal
The next step is to cut down your additional expenses. Scrutinise your monthly budget and identify the items/areas consuming a large amount of your monthly income. Put a hold on luxury spending and especially on the high ticket items.
Also, review your monthly subscriptions, reduce your weekly shopping expenses and avoid purchasing luxury brand items. These smaller steps will ultimately save a larger amount of money that will contribute to increasing your savings.
Save on Utility Bills
Saving on utility bills is not a huge lifestyle change, rather it is to take small precautions that can ultimately save you a lot. Start by saving DEWA bills by reducing electricity and water usage. Avoid consuming electricity during peak hours and use more energy-saving appliances.
For water, ensure that there are no leaks in your toilet and faucets. The easy way of checking toilet leakage is by using food colour. Add a few drops of food colour to your toilet tank and wait for a few minutes, if the colour appears in the flush, the toilet is leaking somewhere.
Reduce Rent Cost
A comfortable life is the ultimate goal of every individual, but for purchasing your own home, you have to temporarily shift your lifestyle. The ideal rent should not increase more than 30% of your monthly income. So, if you are paying more than this, it is time to browse through these apartments for rent in Dubai and shift to a more affordable home.
Consider selling your unused stuff while shifting to a rented apartment. This will provide you with some additional income and also free some space in your home.
Use Automated Saving Plan
The automated saving plan aids in increasing your savings by transferring a certain amount of your monthly income into a saving amount. This transaction will help you in sticking around to your budget.
Moreover, this will also help in cutting down leisure activities that should be avoided for some time. You can also opt for a normal savings account with any bank operating in the region. Although, these savings accounts will not provide you with any interest that you might normally get in other countries. But it will help you in separating an amount from your expenditure.
Search for a Part-Time Job
The last tip on how to save money for a house down payment is to search for an additional income. It is not necessary to work more than the permissible limit, you can search for a freelancing job. Freelancing will help you in earning a significant amount while working from home.
FAQs
Is there any minimum income limit to purchase a property in Dubai?
Yes, for purchasing property in Dubai,expats must earn a certain amount. Generally, the minimum income limit is AED 15,000, but it may vary from bank to bank.
Can expats apply for a mortgage in Dubai?
Yes, expats are permitted to apply for mortgages in Dubai. Different types of mortgages are provided by the banks including variable interest rates, fixed-rate mortgages and discount rate mortgages. However, expats can only purchase properties in the free-hold areas of Dubai. For more information related to areas of Dubai, read our area guide.
Can I negotiate a down payment while purchasing a property in Dubai?
The down payment on properties is fixed by the government. However, you can negotiate the overall amount of the property while purchasing. Negotiating while purchasing is one of the fastest ways to secure money on properties.
Moreover, you should also consider legal charges and agent fees that will be incurred on the property purchases.
These were all the tips on how to save for a down payment for purchasing your own home in Dubai. We hope that these tips will help you in saving for your own house. Excluding a down payment, you can take a mortgage from multiple banks in the UAE.
Related Posts
