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How End-Users are kicked out of the market

Discussion in 'Dubai property' started by Investoman_uae, Nov 3, 2008.

  1. Investoman_uae

    Investoman_uae New Member

    Ok guys this is important, I want to share my experience with you so that you see how End-Users (such as myself) are struggling as well. So its not just speculators who are gettin kicked out of the market.

    This is my story:

    In May I bought an exclusive apartment in Abu Dhabi Al Reem Island for a good price of 1824/sqft. That was just before Cityscape Abu Dhabi.

    The payment plan is 15% every month. I calculated my budget, I came up with 300,000 dirhams (the first 15%) and was hoping the bank could cover the next 15% since they lended 85% back then.

    Next week, the second installment is coming up (another 300,000) so I was thinking the bank could cover that without an issue.

    Next thing, I ring (name of bank) and I get told, I am sorry sir, we have dropped our LTV to 65% and you have to transfer your salary to us if you want 70%. So basically they want me to pay the next 15% (300,000) which then amounts to 30% paid. Then they can start with the remaining 70%.

    I was like, hello, I dont have 300,000 right now... and charge me whatever rate you want, but I need the bank to help out on this one. Hopelly the apartment sells within the next 6 months before the 3rd installment kicks in.

    Now, I am stuck, the bank wont help... and I am an End-User who wants to live in this flat once its completed.... I wanted it cos its in the best location at the entrance of Al Reem Island.


    Well, I am a pissed off End_User who is forced to sell his apartment at 5% premium :mad: and even more pissed off for putting it at this low price.

    How can banks lend 65% thats a friggin joke. Nobody has 35% cash as a down payment. So who can buy properties now? Nobody. . . not speculators, not end-users..

    I have two options... ... another person (he can see himself as an investor if he wishes) kicks in with his 300,000 and once the property sells we share the profit. Or...

    I have to get a personal loan from my bank (max 250,000) and pay a massive rate and then hopefully the apartment will sell soon and everyone gets their money bank.

    The developer is selling apartments there at 2,700/sq.ft and am selling at 5% premium over 1824/sqft ?? What a friggin frustrating position am in :mad:

    I got played by the bank big time and i guess nobody had a crystal ball to see what will happen in the future and how banks will lower their LTVs from 85% to 65%.

  2. PropGuy

    PropGuy New Member

    What is the payment on completion?
  3. Investoman_uae

    Investoman_uae New Member

    Its 15% every 6 months. . .all the way till the end apart from the last payment which is 25 % (end of 2009).

    The Original Price of the property is around 2M.

    Any ideas or solutions are welcome.

  4. doreal2

    doreal2 Banned

    same thing happen to me, i'm end user and bank used to finance 95% when i bought in Badrah phase 2 - i paid the initial 10% on the assumption that i'll get the loan just like that now the LTV is just 70% and i cant pay!!

    moreover i'm trying to get rid of the appartemanet as i cant pay the next payment - i offerd the unit with 0% and no buyers so far due to current panic in the market!!

    if any one can help me find a buyer i'll really appreciat it and i'll even pay them 1% of my cost.

    doreal at live dot co dot uk
  5. sasherwani2

    sasherwani2 New Member

    These are the kind of horror stories I was refering to..

    This is just the beginning
  6. djaan

    djaan New Member

    in my case the bank says as selfemployed we will only than accept a loan
    when your company is 3 years old but my company is only 6 months old what
    can i do?any suggestion
  7. Investoman_uae

    Investoman_uae New Member

    Are you tryin to add salt to the wound? :)

    I have an option which is to get the personal loan and that will buy me another 6 months and hopefully I can sell it within the next 6 months.

    I say to everyone in similar situations to hang in there, dont panic, share your experiences and everyone else can offer solutions/suggestions.

    Am goin to try and get a personal loan tomorrow and see where that will take me.

  8. djaan

    djaan New Member

    if i were you i would not pourmore money into it untill you are sure that you can
    pay till completion.What is if you not sell it in next 6 months than you have lost
    all your money
  9. doreal2

    doreal2 Banned

    I agree with u djaan - in this situation i recall a saying "lose less now, rather than waiting for uncertain gains in the far future"
  10. PropGuy

    PropGuy New Member

    There are 3 choices:
    (1) Borrowing cost is coming down now, so maybe finance may become available soon. Best contact somebody in your bank and see what is happening.

    (2) Sell this one, and buy one with a better payment plan there 20/80 and 30/70 payment plans out there.

    (3) Sell this one and don't buy until market gets better.
  11. doreal2

    doreal2 Banned

    the problem is that i'm trying to sell - with 0% premium and no luck so far!!
    any help?
  12. Investoman_uae

    Investoman_uae New Member

    What do you guys mean if I cant pay the next ones I will loose everything.... how will I loose everything. Can the developer take the apartment from me or what?

    I just spoke to the bank today and they said they can lend me 250,000 ... I can get the other extra 50,000... which makes 300,000. So now, I will be able to pay the next installment.

    However, if I dont sell it in the next 6 months, I agree I will have more problems. I dont kno what type of problems though, because I dont kno what the developer is capable of doing.

    I am hoping the market will recover in the next 6 months. I have faith!

  13. Investoman_uae

    Investoman_uae New Member

    Sorry I got confused in my previous post.

    Once I pay the second installment (15%) ... that makes 30% paid.... meaning the bank can kick in for the remaining 70% and hopefully that sorts out this issue until the property sells.

    Also I will be able to bring 300,000 within the next 6 months to pay off the bank personal loan.... and that leaves me ready to tackle mortgage installments once the 70% kicks in.

    All the above assuming the bank's LTV remains at 70%.... I really hope they raise it and the financial market stabalizes somehow.

    What do you guys think?

  14. georgihh

    georgihh New Member

    IF you look properly there is no financial crisis.
    The Americans created the massive cash clearance as they bankrupted couple of companies.
    In this way the people cash is gone and that’s why the dollar gets stronger
    The same people allowed the banks to lend up to 100% of the property value and the same people now restricted the banks to lend up to 70 %.
    Once the market recovers, they will sell the investment companies at double price and the lending business will start again not at 100% but 85, 90%.
    With few worlds the American government (or the rich american) is collecting the money from the poor people all over the world and now we are in the middle of the cycle.
    Six more months and everything will be back to normal.
  15. abudubai

    abudubai New Member

    Glad to hear you're sorted, for a while at least.
    I imagine things will get worse rather than better over the next six months.
  16. djaan

    djaan New Member

    i went last week to Alreem Island in Abu Dhabi i was really surprised to see
    that some buildings were near to completion.if you ask me i really liked
    this place as it is in the middle of the city(i mean not too far away from city centre)
    and the prices still cheaper than the same unit in Dubai.i think when(if) i sell my
    apartements in Dubai i will definitely buy one unit there.if you can hold on till completion i think will be a good investement.

  17. Investoman_uae

    Investoman_uae New Member

    Yeah well this is why I want to hold on to it because as soon as you cross the bridge from Abu Dhabi to Al Reem Island... my apartment is in the tower at the entrance infront of the biggest mall in the island and next to najmat abu dhabi marina (two 5 star hotels are there).

    Why would I want to sell this unit? Cos the bloody bank wont help me out until i pay 30%. I already paid 15%.

    Anyway thanks all for your support and encouraging words.

    I will do my best to keep it...... otherwise if I get an offer right now for 5% premium I will have to let it go.

    Keep your suggestions coming and if anyone has a similar experience, do share it.


  18. georgihh

    georgihh New Member

    I will do my best to keep it...... otherwise if I get an offer right now for 5% premium I will have to let it go.

    Very clever
  19. zombie

    zombie New Member

    Hi there, as far as I know, once you have taken a personal loan(any loan auto loan, credit card laon etc.) from a bank, it gets added to your Liablilty Limit which is roughly 55-60%(as stated by the Central Bank of UAE) of your net income assesed by the bank(irrespective of self employed OR Salaried). Then when you try to take out a mortgage, the bank may be unable to finance your 70% even if your income would allow for that.

    Please check with a mortgage advisor from Banks & Finance Cos before you make any plans.

    Also check the latest property laws of Abu Dhabi if they have any conditions like the new Law 13 in Dubai.


  20. Investoman_uae

    Investoman_uae New Member

    Thanks Vikram for your advice.

    I will try to pay back the loan within the 6 months as I have income from other sources than my salary.

    I really want to sell this apartment now because its putting alot of pressure on me. I really hope the bank increases its LTV soon.

    I dont have any option but to get the loan.

    I dont kno what other people are doing....who are tryin to sell and their installment came up. What if they cant sell.... are they penalised? How?

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