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Often the culmination of years of squirrelling away every spare Rial you earn, reaching that target amount is no small achievement, particularly with house prices soaring in Muscat.
But in today’s market, how much do you really need? Do you need a full 20% deposit, or will the bank let you in the door with considerably less?
Here’s what you should know.How much deposit do you need before approaching a bank?
A 20% deposit is must when buying a home, per Oman Central Bank regulation.
On a OMR 100,000 loan that 20% deposit is only OMR 20,000, but you’ll also have to pay lenders house loan insurance and life insurance, which the banks use to mitigate their risk of lending money to someone with little savings or in case of death.
House loan insurance be in the range of1% to 3% (of the loan amount). Life insurance is also in the range of 2 – 3%. Muscat Home encourages you to shop around for the best rate.
Say you borrow $100,000, it might be 4% property nad life insuranceinsurance (around OMR 4,000), plus the Ministry of Housing duty. So it might be OMR 10,000 to OMR12,000that you’re adding on to your house loan.
Of course, in today’s rapidly changing markets, waiting a few extra months to save additional money to avoid paying interest on your house loan and maximum insurance might mean that the properties in your price range increase in value by much more than the cost of the insurance.
Muscat Home adviceis you should factor those increases in when making your decision about when and how much to borrow.
Sometimes it’s better for the customer to go into a property and pay that insurance, knowing that by the time they try and save that money to avoid paying the house loan insurance, the market’s moved another 10% or 12% and they’re actually behind even further.What other costs are buyers charged?
Depending on which state you’re buying in and the price of the home you’re purchasing, first-home buyer concessions can shave off many of the extra costs normally associated with buying a home.
For homes worth OMR 100,000, you can expect to pay duties of around 5% of the purchase price – that’s OMR 5,000 on a OMR100,000 home. Of course, that extra cost can be capitalized (added onto your overall loan), but it will also slightly increase how much you need to borrow, and thus how much of a deposit you need.
There are also other, fees, for things like broker fee which range from 3 to 5%, this is usuallynegotiable between the seller and the real estate agency.
“They might add up to around OMR 3000 – 5000 for a OMR 100,000 home.
Different banks have different lending requirements.
Your personal financial situation will determine how flexible most lenders will be. For example all other loan will be taken into consideration such as your car loan and any personal loan you might have.
The more you can give the bank, the better, because the less interest you’ll pay. But it does just come down to individual circumstances. How good is your salary plus any other incomes, how long have you been in your job? Where do you work, for example some bank give discount to large organization such as PDO.
The rates and fees are what they are. It’s just a matter of researching through the options to get to the loan that suits your needs. Muscat Home advise you to search around, visit various bank and negotiate the best deal.
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