Considering buying a new home for yourself? It’s not easy as it looks. There are a lot of things to be aware of and factors to be considered when making probably the biggest purchase of your life.

For a typical middle-class executive or working couple, buying a home is a significant decision and thus the opportunities for both grand mistakes and massive gains are plentiful. It’s the developer’s job to pressurize you with deadlines, and make attractive offers to speed up the sale. But remember that your hard-earned money is at stake. Hence investing a lot of time and effort into researching and choosing the right property is not a bad idea.

When buying the home of your dreams, location is probably the most important factor. Factors to consider in the area of your choice, are house prices, schools in the vicinity, amenities, resale value, transportation, etc. Decide on the property that meets your criteria and sign on the dotted line only when you are fully satisfied.

1. Down payment

Once you know the pricing in your desired area, you will also get an idea of how much you will need to put aside for the 25 per cent down payment required by most lenders. This is assuming you are buying the property through mortgage of course. The wise thing to do is to save the amount of the down-payment ahead of time, through proper financial planning.

Important – Consider buying a property only when you have set aside six months’ worth of income as an emergency fund. Do not dip into your emergency fund for the down payment. People who buy property at the expense of their emergency fund face a severe liquidity crunch during emergencies.

Pro tip – The right way to build an emergency fund is to put aside 50 per cent of your monthly disposable amount (disposable amount is the money left after your monthly expenses are paid) in a savings account for emergencies.

2. Negotiating the maze of mortgage rates

There are a variety of mortgage products in the market and researching the pros and cons of all them may not be easy for you. Use the services of a mortgage consultant to find the best mortgage to suit your situation and negotiate the best rates for you. Most importantly, have them scrutinize the fine print in the mortgage papers as well. Always get a proper term life assurance policy to cover the mortgage amount in case of death and assign the policy to the lender. This will protect your family in case something happens to you. When applying for such a policy, ensure that the mortgage provider approves the life insurance company you choose. What happens in cases of critical illness or disability? The life cover won't pay out if the policy holder is alive. Make sure you apply for disability and critical illness for at least five years’ worth of income. This will allow you to take a recover from the illness and then get back to work while maintaining your mortgage payments. If you are disabled, the policy should cover atleast the rest of the mortgage payments, if not all.

3. Is the Mortgage really affordable?

Most people buy a property in the UAE because they feel that the amount they pay towards rent can be paid towards the mortgage premiums. This way, they would not be ‘wasting’ their money on rent. Remember that the monthly instalment is not the only outgoing amount each month. You will have to pay maintenance and service charges as well. The premiums of the life assurance policy are to be included as well in the total outgoing. Pro tip - Ideally the total outgoing towards the property purchase should not be more than 30 per cent of your income.

4. Protect your investment after the purchase

The ‘Tamweel tower fire’ incident in JLT, is proof enough of the reason you should insure your belongings and the home itself. Fire, floods and other natural causes can damage your home. When you add up the cost of all your belongings, it can total around Dh100,000- Dh200,000 or even more. Imagine if you have to replace all your belongings in case of fire. Good home content policies in the UAE are very cheap and comprehensive. The right policy will cover the structure of the house, as well as the belongings and the mortgage amount for at least three to six months. Cover can be obtained to protect your home and belongings for fire, theft and natural calamities. Avoid local insurers and choose a reputed international provider.

5. Will

Your home is considered a fixed asset in your estate in the UAE. If something happens to you and you have no will in place, the UAE government will follow Sharia for the disposition of your property. To avoid complications, a married couple, who are joint owners of the property, should each draw up a will and include the home in it. Ensure that the wills are done through qualified and licensed service providers and that they are registered with the right authorities. Summary Your home cannot go with you should you decide to move overseas, so keep monitoring the real estate market and the prices in your area for opportunities to exit. Sometimes it is prudent to sell your home at the right time and make a profit.