“Congratulations!,” enthused the scrawl on the key fob. “You are now the proud owner of your first home.”
A nice, personal, seemingly genuine message from the estate agent.
It was a written to a 30-something-year-old I know who this week crossed a fundamental financial milestone – as current convention would have us believe.
Owning a home is a dream for the majority - I think it’s safe to say that.
Who wouldn’t want to wake up in a place they love, done exactly to their taste. But, assuming this could only happen if you take out a huge loan from a bank, the big questions to contemplate include: is the stress of paying down the debt going to cripple you – emotionally and or financially? And is it the best use of your money?
Property ownership is often equated with personal prosperity. But the numbers don’t always reflect this – and increasingly so.
You might be tempted to buy – what with Abu Dhabi’s real estate market seeing a steep decline in prices in the past year, according to Knight Frank’s Global Residential Cities Index 2017.
But, before you decide to do this, check what your monthly payment on a mortgage would be – you’d need a 25 per cent deposit, too, and compare it with the cost of renting a similar property.
Don’t forget to add the hefty charges and fees associated with buying – including transfer fees, mortgage registration if a Dubai property, and estate agent fees.
Now take all that money, including the deposit, and punch it in to a compound interest calculator. As an example, I used Dh300,000 as the deposit (25 per cent plus various fees for a fictional Dh1 million property), over a 25-year period, with Dh3,560 being paid in monthly (in lieu of mortgage payment). At 3 per cent the amount compounded to over Dh2.2m. That’s without doing a thing. No maintenance, repairs, tax or the equivalent.
This is an example of opportunity cost. Another example would be putting some money in low-cost index funds. The point is, work out the maths.
And then look at the cost of renting, and just putting the deposit – assuming you have this pot – into an investment or compounding account. Better still, put the difference between monthly rent and a mortgage payment into an investment. With rent coming down - in some places it’s a double-digit decline - it’s reasonable to assume that rent will cost less than a mortgage payment.
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Read more:
Magic numbers to help calculate a financially secure future
Plan for early 'freedom from work', not retirement
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An example of this is what’s happening in London. A recent report by UK property website Zoopla revealed that after seven years, the typical tenant in the capital, London, is £82,412 (Dh425,338) better off than someone who buys an equivalent property with a 10 per cent deposit. It claimed that it takes 18 years for the buyer to be better off than the renter. Why? Because, currently, monthly rent is significantly lower than a monthly mortgage payment for an equivalent property. London and UAE properties are similar in that they are priced at many times the average salary. Still itching to buy?
A word of caution, however. It depends on how you define "better off". Yes, you’d be better off because you’d have more disposable income every month – but, to stay ahead of the game, saving must become investments – preferably investments that provide passive income.
A huge mental shift is to want to rent – not to look at it as a "waste of money" - because it could be going towards paying a mortgage.
I’m referring to the idea of home ownership as a forced savings plan. It goes like this:
For 25 years, you make a large payment towards paying down the balance on your mortgage. When you've paid it off, you own the house outright. The flaw in this strategy is that house prices can significantly underperform other forms of investment. But, you’d still have a roof over your head.
So, what do renters have to do to make sure they don’t end up with no where to live, and no money to pay for rent when they no longer earn?
In a word, discipline. They need to have the discipline to commit to a savings plan that becomes an investment plan. For people who lack the ability and discipline to commit to this, housing is a nice fail-safe, but not always one that provides financial gain.
Home ownership is widely regarded as being the only sensible option. It’s a view pushed by real estate agents, lenders, parents, friends, family. There are some though, who see mortgages as a form of peonage – a type of indebted servitude to banks.
There’s nothing wrong with sinking a chunk of money into a deposit if it works for you – just think it through.
In the case of the 30-something who bought into 25 years of debt, I feel he’s been cajoled by family – but the thing is, it is he who carries that debt. Not them.
I do hope it is the best thing for him, his finances - and his faculties.
Votes
Total votes: 1.8 million
Ashraf Ghani: 923,592 votes
Abdullah Abdullah: 720,841 votes
Armies of Sand
By Kenneth Pollack (Oxford University Press)
Dubai Women's Tour teams
Agolico BMC
Andy Schleck Cycles-Immo Losch
Aromitalia Basso Bikes Vaiano
Cogeas Mettler Look
Doltcini-Van Eyck Sport
Hitec Products – Birk Sport
Kazakhstan National Team
Kuwait Cycling Team
Macogep Tornatech Girondins de Bordeaux
Minsk Cycling Club
Pannonia Regional Team (Fehérvár)
Team Auvergne-Rhône-Alpes
Team Ciclotel
UAE Women’s Team
Under 23 Kazakhstan Team
Wheel Divas Cycling Team
TO A LAND UNKNOWN
Director: Mahdi Fleifel
Starring: Mahmoud Bakri, Aram Sabbah, Mohammad Alsurafa
Rating: 4.5/5
If you go
Flight connections to Ulaanbaatar are available through a variety of hubs, including Seoul and Beijing, with airlines including Mongolian Airlines and Korean Air. While some nationalities, such as Americans, don’t need a tourist visa for Mongolia, others, including UAE citizens, can obtain a visa on arrival, while others including UK citizens, need to obtain a visa in advance. Contact the Mongolian Embassy in the UAE for more information.
Nomadic Road offers expedition-style trips to Mongolia in January and August, and other destinations during most other months. Its nine-day August 2020 Mongolia trip will cost from $5,250 per person based on two sharing, including airport transfers, two nights’ hotel accommodation in Ulaanbaatar, vehicle rental, fuel, third party vehicle liability insurance, the services of a guide and support team, accommodation, food and entrance fees; nomadicroad.com
A fully guided three-day, two-night itinerary at Three Camel Lodge costs from $2,420 per person based on two sharing, including airport transfers, accommodation, meals and excursions including the Yol Valley and Flaming Cliffs. A return internal flight from Ulaanbaatar to Dalanzadgad costs $300 per person and the flight takes 90 minutes each way; threecamellodge.com
SPECS
%3Cp%3E%3Cstrong%3EEngine%3A%3C%2Fstrong%3E%201.5-litre%204-cylinder%3Cbr%3E%3Cstrong%3EPower%3A%3C%2Fstrong%3E%20101hp%3Cbr%3E%3Cstrong%3ETorque%3A%3C%2Fstrong%3E%20135Nm%3Cbr%3E%3Cstrong%3ETransmission%3C%2Fstrong%3E%3A%20Six-speed%20auto%3Cbr%3E%3Cstrong%3EPrice%3A%3C%2Fstrong%3E%20From%20Dh79%2C900%3Cbr%3E%3Cstrong%3EOn%20sale%3A%3C%2Fstrong%3E%20Now%3C%2Fp%3E%0A
Killing of Qassem Suleimani
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Revibe%20%0D%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202022%0D%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Hamza%20Iraqui%20and%20Abdessamad%20Ben%20Zakour%20%0D%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20UAE%20%0D%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Refurbished%20electronics%20%0D%3Cbr%3E%3Cstrong%3EFunds%20raised%20so%20far%3A%3C%2Fstrong%3E%20%2410m%20%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EFlat6Labs%2C%20Resonance%20and%20various%20others%0D%3C%2Fp%3E%0A
The specs
Engine: 77.4kW all-wheel-drive dual motor
Power: 320bhp
Torque: 605Nm
Transmission: Single-speed automatic
Price: From Dh219,000
On sale: Now
What is double taxation?
- Americans living abroad file taxes with the Internal Revenue Service, which can cost hundreds of dollars to complete even though about 60 per cent do not owe taxes, according to the Taxpayer Advocate Service
- Those obligations apply to millions of Americans residing overseas – estimates range from 3.9 million to 5.5 million – including so-called "accidental Americans" who are unaware they hold dual citizenship
- The double taxation policy has been a contentious issue for decades, with many overseas Americans feeling that it punishes them for pursuing opportunities abroad
- Unlike most countries, the US follows a citizenship-based taxation system, meaning that Americans must file taxes annually, even if they do not earn any income in the US.
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
UAE tour of the Netherlands
UAE squad: Rohan Mustafa (captain), Shaiman Anwar, Ghulam Shabber, Mohammed Qasim, Rameez Shahzad, Mohammed Usman, Adnan Mufti, Chirag Suri, Ahmed Raza, Imran Haider, Mohammed Naveed, Amjad Javed, Zahoor Khan, Qadeer Ahmed
Fixtures: Monday, first 50-over match; Wednesday, second 50-over match; Thursday, third 50-over match
Kat Wightman's tips on how to create zones in large spaces
- Area carpets or rugs are the easiest way to segregate spaces while also unifying them.
- Lighting can help define areas. Try pendant lighting over dining tables, and side and floor lamps in living areas.
- Keep the colour palette the same in a room, but combine different tones and textures in different zone. A common accent colour dotted throughout the space brings it together.
- Don’t be afraid to use furniture to break up the space. For example, if you have a sofa placed in the middle of the room, a console unit behind it will give good punctuation.
- Use a considered collection of prints and artworks that work together to form a cohesive journey.
Ticket prices
- Golden circle - Dh995
- Floor Standing - Dh495
- Lower Bowl Platinum - Dh95
- Lower Bowl premium - Dh795
- Lower Bowl Plus - Dh695
- Lower Bowl Standard- Dh595
- Upper Bowl Premium - Dh395
- Upper Bowl standard - Dh295
Maestro
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3EBradley%20Cooper%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3EBradley%20Cooper%2C%20Carey%20Mulligan%2C%20Maya%20Hawke%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%203%2F5%3C%2Fp%3E%0A
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
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Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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Employment lawyer Meriel Schindler of Withers Worldwide shares her tips on achieving equal pay
Do your homework
Make sure that you are being offered a fair salary. There is lots of industry data available, and you can always talk to people who have come out of the organisation. Where I see people coming a cropper is where they haven’t done their homework.
Don’t be afraid to negotiate
It’s quite standard to negotiate if you think an offer is on the low side. The job is unlikely to be withdrawn if you ask for money, and if that did happen I’d question whether you want to work for an employer who is so hypersensitive.
Know your worth
Women tend to be a bit more reticent to talk about their achievements. In my experience they need to have more confidence in their own abilities – men will big up what they’ve done to get a pay rise, and to compete women need to turn up the volume.
Work together
If you suspect men in your organisation are being paid more, look your boss in the eye and say, “I want you to assure me that I’m paid equivalent to my peers”. If you’re not getting a straight answer, talk to your peer group and consider taking direct action to fix inequality.
