A simple answer is yes, but the process of selling a mortgaged property is longer. If you own a mortgaged property in Dubai, you don’t need to settle the loan to sell it. Plus, DLD has a process for registering the sale of a mortgaged property. But how do you sell a mortgaged property in Dubai? What documents and fees are required?
As a seller, this guide will help you sell your mortgaged property in Dubai with ease.
- Take Approval From the Bank
- Obtain a Liability Letter
- List Your Property for Sale
- Sign an Agreement With the Buyer
- Obtain NOC
- Mortgage Settlement
- Pay the Fees for Mortgage Release
- Transfer of the Property
- How the process differs for different buyers
- FAQs
Key Takeaways
- You can sell a mortgaged property in Dubai without settling the loan, but you require bank approval and a liability letter.
- The process includes listing the property, signing an agreement, and obtaining an NOC from the developer.
- Both cash and mortgage buyers need to follow specific steps for payment and mortgage settlement during the sale.
- You must pay fees such as an early settlement fee and registration charges for the mortgage release certificate.
Step-by-Step Process to Sell a Mortgaged Property in Dubai
You can sell a mortgaged property, but the bank requires full settlement before transfer of the title deed. Moreover, you can sell your property to any buyer with cash or a mortgage.
Here’s the complete process to sell a mortgaged property in Dubai.
1. Take Approval From the Bank
Check your agreement with the bank to see if you can sell the property. Banks usually charge an early settlement fee. Check the clauses in your mortgage agreement.
2. Obtain a Liability Letter
After that, obtain a liability letter from the bank to know the exact payoff amount. It mentions the outstanding mortgage amount, early settlement charges, and other fees. Once you request the liability letter from the bank, it will take 3 to 5 working days.
3. List Your Property for Sale
Submit a property sale inquiry in Dubai to connect with professional agents who match your property with the right buyer. Make sure to keep a fair price. You can check a competitive price range for your property from the DLD transactions and market data.
4. Sign an Agreement With the Buyer
After the buyer has viewed your property and placed an offer, sign the RERA Form F, a Memorandum of Understanding between the buyer and the seller in Dubai.
5. Obtain NOC
The seller needs to obtain an NOC from the developer stating there are no outstanding payments and service charges.
6. Mortgage Settlement
For mortgage settlement, the buyer and seller must register the sale of the mortgaged property with Dubai Land Department (DLD).
The amount from the buyer will pay off the outstanding mortgage. If the buyer is buying the property on mortgage, the bank will pay off the other bank’s mortgage (bank-to-bank). The seller will receive the remaining amount.
The transaction details will be added to the DLD registrar system. After that, the auditor will audit the transaction and provide a link to the property registration certificate via email. Additionally, the seller will receive a bank indebtedness check to complete the procedure with the bank and obtain a mortgage release certificate.
7. Pay the Fees for Mortgage Release
You must pay the following fees for the mortgage release certificate and registration of the sale of the mortgaged property in Dubai.
- Early settlement fee (bank): 1% of outstanding balance, capped at AED 10,000
- Mortgage release procedure (DLD): AED 1,290
- Registrar fee to release the mortgage: AED 315
8. Transfer of the Property
After obtaining the original title deed and mortgage release certificate, you can register the property sale in Dubai. As a buyer, make sure you understand the process to buy the property in Dubai.
How the Process of Selling a Mortgaged Property Differs According to the Buyer
Cash Buyer
If the buyer is purchasing property with cash, they will issue a cheque in the name of the bank according to the liability letter amount. The remaining amount will be paid to the seller at the time of property transfer.
Mortgage Buyer
The liability letter will go to the buyer’s bank. The buyer’s bank will settle the amount with the seller’s bank. After receiving the original title deed and mortgage release letter, both parties can apply for property transfer in Dubai.
FAQs
Yes, you can rent out a mortgaged property in Dubai. Simply submit a renting out inquiry in Dubai and find a good tenant.
No, there are no capital gains taxes in Dubai. That’s what makes the city one of the best places to invest in real estate. However, you will incur some fees and costs when buying a property in Dubai.
Yes, the UAE Central Bank has set a fee of 1% of the remaining mortgage amount, capped at AED 10,000.
So, it is possible to sell a mortgage property in Dubai. However, it’s important to understand the process. For buyers, it is the same process as buying other properties for sale in Dubai.
For more tips, advice, and laws related to the real estate market, keep reading the DubaiSale blog.
