Complete guide to selling your property in Dubai

Comprehensive Guide to Selling a Mortgaged Property in Dubai

Are you a Dubai property owner looking to sell a property with an existing mortgage? If you’re unsure about the process, Ayana Properties is here to guide you through the steps. We’ll explain the procedure for selling mortgaged properties in Dubai, covering essential aspects such as fees, necessary documents, and even addressing the nuances when dealing with off-plan mortgaged properties.

Is it possible to sell a property with a mortgage in Dubai?

The short answer is YES, Dubai homeowners can take comfort in the fact that they have the option to sell their property even if they haven’t fully cleared the mortgage. Nevertheless, it’s crucial to understand that selling a mortgaged property in Dubai involves extra stages and could become intricate if you’re unfamiliar with the correct protocols.

What is the procedure of selling a property with a mortgage in Dubai?

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Curious about the process of selling a property with a mortgage in Dubai? After the seller secures a buyer and signs Form F (Memorandum of Understanding), which encompasses all the specifics and conditions of the sale, the subsequent actions must be taken for selling a financed property in Dubai.

1. Request a liability letter from the lender

The seller is required to request a liability letter from their bank, which will indicate the outstanding amount remaining on the property.

2. Request a No Objection Certificate (NOC) from the developer

Following this, the seller must proceed to obtain a No Objection Certificate (NOC) from the property’s developer. This step is crucial to verify the absence of any unpaid service charges to the developer.

3. Property Blocking Under the Buyer Name

Before the buyer settles the seller’s mortgage, a procedure called ‘property blocking‘ occurs to safeguard the buyer. The seller, buyer, and other relevant parties are required to visit a Dubai Land Department (DLD) registration trustee’s office to initiate the property blocking process under the buyer’s name. This measure ensures that the buyer can proceed with clearing the seller’s mortgage and prevents the seller from selling the property to anyone other than the buyer.

When initiating the property blocking process in Dubai, you will need the following documents:

  • Liability letter from seller’s bank
  • Form F (MOU)
  • NOC from developer
  • Copy of the title deed
  • Cheque made payable to the bank (for the liability letter amount of the purchase price)
  • Cheque made payable to the seller (for the balance amount of the purchase price)
  • Cheque made payable to Dubai Land Department (for the 4% transfer fee)
  • Original passport, visa, and Emirates ID (buyer and seller)

4. Acquire the clearance letter and original title deed.

Subsequently, in the process of selling mortgaged property in Dubai, it’s essential to submit the buyer’s cheque to the bank. Once the seller’s mortgage is successfully settled, the bank will provide the seller with the property mortgage release letter or clearance letter, along with the original title deed.

5. Complete the property transfer to the buyer’s name.

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The concluding step when selling mortgage property in Dubai involves both parties revisiting the DLD registration trustee’s office for the ownership transfer. During this stage, the seller’s existing mortgage will be released, leading to the issuance of a new title deed in the buyer’s name.

To release the seller’s mortgage, the following documents will be necessary:

  • Original title deed
  • Mortgage release letter from the bank
  • Passport, Visa, and Emirates ID

This process applies when a mortgaged property is being sold to a cash buyer. However, it’s vital to acknowledge that if the buyer is also obtaining a mortgage for the property, the selling procedure might take longer. The seller’s mortgage is cleared once the buyer’s bank grants final approval for the loan.

Furthermore, if the buyer is mortgaging the property, the property blocking process won’t be required. Instead, the original title deed will be released to the buyer’s bank after it settles the mortgage with the seller’s bank.

How to sell off-plan mortgaged property in Dubai?

In the context of off-plan property held under a mortgage, it’s advisable to communicate with the developer to confirm the property’s sale eligibility. Developers may implement policies that restrict the sale of off-plan property until a certain portion of the payment plan has been fulfilled. These regulations can vary between developers, underscoring the importance of verifying this aspect before proceeding with the sale of your off-plan mortgaged property.

Additionally, selling financed off-plan property in Dubai might necessitate an extra no objection certificate from the Dubai Land Department. Moreover, there could be disparities in the associated expenses and charges when selling a mortgaged off-plan property compared to a ready property.

What are the relevant fees when selling a mortgage property in Dubai?

  • Early Settlement Fee: This charge applies when sellers settle their mortgage before its term ends. The reduced fee is now 1% of the outstanding amount or AED 10,000 (whichever is lower).
  • Blocking Charges: Sellers pay this fee to block the property before the buyer clears the seller’s mortgage. The fee starts at AED 1000.
  • Mortgage Release Fee: Paid to release the seller’s existing mortgage, this fee is typically AED 1,290 for a regular mortgage. Additional charges are paid to the registration trustee. For Islamic mortgages, the release fee is around AED 1,560.
  • NOC Fee: The No Objection Certificate fee usually ranges from AED 500 to AED 5000, depending on the developer. This fee is usually covered by the seller.

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