Purchasing your first home is a significant milestone, but it is also a huge financial commitment. Many UAE residents who wish to buy property have found the biggest challenge to be saving for the down payment. However, the Central Bank of the UAE has reduced the loan-to-value ratio for first time homebuyers this year, thereby simplifying the process for aspiring property owners.
There are however a few crucial points to keep in mind while saving to ensure good results.
Firstly, it is extremely important to open a savings account. You need to be strict about setting aside a specific amount or percentage from your salary each month and ensure that it is deposited into a dedicated savings account.
Secondly, a monthly budget can act as a great guide for financial security. It helps you realize your financial priorities while also keeping track of your overall spending. A monthly budget also allows you to analyze your expenses and cut down on unnecessary ones, if any. Since a home down payment is the top priority, you can also calculate a percentage of your income that will be dedicated towards this expense, by calculating the amount required and the time left.
Lastly, rental expense. Rent is often the biggest monthly expenditure in everyone’s budget. If you are currently renting, it is beneficial to consider downsizing or moving to a cheaper location. This will benefit in two ways, as it will help reduce rental costs in the short term, while also saving towards your dream home.
Saving for the down payment of a home is no easy task, but with some financial discipline and a few short-term sacrifices, it is most definitely possible.