From Dh160,000 in hidden fees to bank valuation shocks, here’s what experts say you must know before you start your search.
SHARJAH – With studies showing that seven out of ten UAE residents are planning to buy property this year, the market is seeing a surge of first-time buyers. However, real estate experts warn that entering the market without proper preparation can turn a dream home into a financial nightmare.
While saving for a down payment is the first hurdle, many new buyers are blindsided by hidden transaction fees, unexpected bank valuations, and ongoing costs that can derail a purchase at the last minute.
To help you navigate the market, we’ve broken down the seven most common mistakes first-time buyers make, and how to avoid them.
1. Starting Your Search Without a Budget
Many buyers make the critical error of viewing properties before they have a firm grasp on their finances.
The Risk: Falling in love with a home you can’t afford. “Serious buyers should ideally have around 70 to 80 per cent of their finances clear before they start viewing properties,” says Muhammad Ali Khan, Sales Manager at Banke International Properties. Without this clarity, buyers often commit emotionally, only to discover later that the bank won’t approve the required loan amount.
The Fix: Secure a mortgage pre-approval before you attend a single open house.
2. Ignoring the ‘Hidden’ 8% Fee
Focusing solely on the down payment is a classic trap.
The Risk: Being caught off guard by upfront transaction fees. “The ‘hidden costs’ like registration fees, mortgage charges, and post-handover fit-out costs are often underestimated,” said Elie Naaman, CEO and Co-Founder of Ellington Properties. These fees—including Dubai Land Department transfers, agency commissions, and bank processing charges—can add up to 7–8 per cent of the property’s value. On a Dh2 million property, that means having an extra Dh140,000 to Dh160,000 in cash ready.
The Fix: Calculate all transaction costs upfront and ensure you have the liquid cash to cover them.
3. Forgetting About Life After the Purchase
The sale price is just the entry ticket.
The Risk: Underestimating ongoing financial commitments. “Buyers often underestimate service charges and future maintenance costs, especially for older properties,” warns Svetlana Vasilieva, Head of Secondary Sales at Metropolitan Premium Properties. These recurring fees can significantly impact your monthly budget if not factored in early.
The Fix: Always request the service charge history for any property you are considering and include it in your long-term affordability calculations.
4. Assuming the Bank Will Cover the Full Cost
Many first-timers mistakenly believe the mortgage will cover 100% of the property value.
The Risk: A financing shortfall. “Expat buyers typically receive 70–80 per cent financing at best,” Muhammad explained. If the bank’s valuation comes in lower than the agreed purchase price, the buyer must pay the difference in cash. This “valuation gap” is a common deal-breaker for the unprepared.
The Fix: Consult a mortgage advisor early to understand your exact loan-to-value ratio and have backup property options.
5. Comparing Mortgage Payments Directly to Rent
It’s tempting to think, “I pay Dh10,000 in rent, so I can afford a Dh10,000 mortgage.”
The Risk: A false sense of affordability. “While the monthly instalment may appear similar on paper, buyers often forget to account for interest rate fluctuations, service charges, insurance, and long-term ownership costs,” Muhammad said. These extras can make homeownership significantly more expensive than renting.
The Fix: Build a comprehensive monthly ownership budget that includes mortgage, service charges, utilities, and maintenance.
6. Dismissing the Fine Print and Paperwork
Documentation delays are one of the biggest killers of property deals in the UAE.
The Risk: Legal and financial penalties. “Once a Form F is signed, withdrawing becomes difficult and penalties apply,” said Svetlana. Issues like missing No Objection Certificates (NOCs), title deed discrepancies, or delays in clearing a seller’s existing mortgage can stall a transaction and cost you money.
The Fix: Before signing anything, ensure every document is in order. Work with experienced agents who can flag potential red flags early.
7. Skipping the Pre-Approval Step Entirely
Around 15 to 20 per cent of buyers face major challenges during the formal loan approval process.
The Risk: Wasted time and failed transactions. Common reasons for rejection include insufficient fixed income, high existing liabilities (personal loans, credit cards), or a short employment history. Self-employed buyers and new residents face even stricter scrutiny.
The Fix: Get pre-approval before you start your search. It takes a few days and can save you months of disappointment.
