|POA||Power of attorney|
|PSA||Purchase & sales agreement|
|NOC||No objection certificate|
|DEWA||Dubai electricity & water authority|
|ADEWA||Abu Dhabi electricity & water authority|
|LTV||Loan to value|
|DBR||Debt burden ratio|
|MOU||Memorandum of understanding|
|TOB||Terms of business|
|RBR||Retail borrowing rate|
|BMR||Bank mortgage rate|
|APR||Annual percentage rate|
|DLD||Dubai land department|
Power of attorney is used for either buyers or sellers where the person cannot be present at the time of the transaction and has legally entrusted an appointed representative through the Dubai courts or otherwise attested by the Dubai Courts that can fulfil the duties as if they were the buyer or seller.
Purchase & sales agreement is usually provided at the first point of sale between the original developer and the buyer, this can be transferred to another buyer historically although recently they will be given a pre-title deed registered on Oqood.
No objection certificates are provided by the developer or master developer to confirm that the legal title can be transferred from a seller to a buyer. This will confirm that no outstanding monies are owed for the property e.g., maintenance/service contracts, electricity, water and other registered mortgages.
Loan to value is the percentage amount determined by the bank that they will assist with regarding a mortgage; this is usually in the range of 75-85% meaning: the bank pays up to 85% of the confirmed market value (as confirmed from an independent valuation) and you pay the remaining 15%.
Valuation is required by all lenders to determine an independent market appraisal of the subject property and to confirm there are no major defects. This is merely a market appraisal done by sight and doesn’t constitute a structural survey. This can be arranged separately at the buyer’s expense but usually found to be very expensive and ineffective as most properties are less than 5 years old.
Debt burden ratio is a term used by banks globally to determine the affordability of all loans to potential clients. This is usually determined as set by the central bank that you may not borrow money where the total combined repayments exceeds more than 50% of your total monthly income. Some banks may include more of your income (i.e. commission, overtime, housing etc) than others as they all have their own individual policies.
Annual percentage rates for UAE banks in terms of home finance or mortgages are determined either by profit rate (for Islamic mortgages) or interest rate (for conventional mortgages). In either case they are calculated on a reducing balance and calculated on a daily basis. They are not FLAT rates which for the purpose of a mortgage would be very costly considering the general length of time that mortgages are termed for.
Memorandum of understanding is an agreement entered into by both buyer and seller to legally make a sale of a property. It is an understanding of the price, fixtures, fittings and conditions of the sale between both parties. It will also mention if finance is being used by either party in order to pay off or register at the land department.
Mortgage consultant is a term used for someone who is working independently of any bank but has full use of their suite of products and in a lot of cases at preferred rates or with special conditions. A mortgage consultant will act independently of all parties except for the buyer who appoints them. There is usually a fee associated by mortgage consultants due to the level of work they are engaged in which should be covered in the agreed terms of business. They will guide you through the whole mortgage process from inception to transfer advising on which steps need to be done and when, also they will advise if the seller has finance to pay and how and when this is to be done.
Fees, there are many fees associated with the buying and selling process as detailed although not limited to the following:
- Real estate fee
- Conveyance fee
- Mortgage processing fee (usually deducted from final arrangement fee but taken in advance)
- Mortgage arrangement fee
- Mortgage consultant fee
- DLD fee
- Mortgage registration fee
- NOC fee
- Title deed fee