ERA Advisor
Buying or selling a property is one of the most important decisions you are likely to make. ERA makes it a little easier by answering some commonly asked questions and offering these helpful real estate tips and facts before you put up or respond to that for sale sign.
Have a real estate related question? ERA's staff will give you the most accurate answer from the best professional sources.
What are the benefits of property ownership?
When you own your residence, it's not only considered a wise, solid investment, according to the Mortgage Finance Authority (M.F.A.), but it also provides a feeling of self-satisfaction and liberty when you know you have something that's all yours.
Many families in Egypt own their own home, and enjoy the extra security and freedom it brings. Many people have seen their homes increase in value over the years, and very few would choose to go back into rented accommodation.
One of the benefits of property ownership is that it allows you to pass a lasting legacy onto your heirs. In other words you are building up accumulated equity that will benefit you greatly in your life time through reduced costs over a period of many years and it secures a more stable and prosperous life for the people you love in the future.
Why is purchasing a property better than renting?
Compare a renter to a property owner: The renter may start out paying L.E:1,500 per month with an annual increase of 5-10 percent. The property owner perhaps purchases a residence for L.E.250,000 and pays a fixed monthly mortgage of L.E.2,000. As the years pass by, the property owner's payment stays the same, while the renter's monthly payment likely continues to rise.
Another benefit in owning a property, according to M.F.A., is the possibility of its value going up over the years because, as you begin to pay off your mortgage loan, you build equity in your property. In other words, the value of your residence can increase as your total mortgage amount decreases over time.
Your property, aside from being a valuable asset, can also be remodeled to be your private castle. This is an option renters don't have.
Owning a residence lets you reap the benefits of any improvements you make, plus you get to live in an individualized environment you have created, not dictated by the apartment or villa owner.
As a home owner, you have a wonderful asset in your home, but you also need to make sure you are meeting your obligations and are making the most of your asset and financing possibilities.
What is a mortgage?
A Mortgage is the process of buying a real estate property by installments that may be spread over 20 years or more, and when the property itself is used as collateral for a loan.
The People’s Assembly passed Real Estate Mortgage Law 148 in 2001. The law allows both banks and non-bank mortgage companies to issue mortgages and provides, for the first time under Egyptian law clear procedures for foreclosure on property of defaulting debtors.
In May 2002, Parliament approved amendments to the Banks and Credit Law that facilitated mortgage activities in banks and lowered property registration fees.
Real estate registration fees were again lowered in 2003 and early 2004. The mortgage law established a General Authority for Real Estate Mortgage Affairs to regulate real estate mortgages in Egypt. Amendments to the existing Capital Market and Real Estate Mortgage laws passed in June 2004 allow the issuance of mortgage-backed securities.
Mortgage Law 148 of 2001 has provided a regulatory framework for issuance of mortgages by bank and non-bank institutions and regulates the securitization of mortgages.
What do I need to do to get started?
Before buying a property with mortgage finance, you should specify your annual income and the amount you can afford to pay monthly to reimburse the installments. You are entitled to double or even triple your annual income as a loan.
Search for a suitable residence or commercial property with through the services of a well-regarded and reputable real estate company, such as ERA. The property must be registered or registerable.
Required Documents
1. Copy of ID or National Card or Passport
2. Proof of Income Document
· Employee: Pay slip from any governmental, public or private sector institution.
· Entrepreneur: Tax return from Tax Authority defining your income over the previous three years.
· Any other proven income acceptable to the relevant authorities.
Tips for Owners of Rental Properties:
Sell your house for cash and receive the value from the mortgage company. This enables you to:
§ Use the money to buy another home or to use it for another investment opportunity.
§ Remove the burden of collecting rental payments from tenants.
§ Not be concerned that the buyer may not meet installment payments.
§ Profit from the property’s appreciation.
Tips for Mortgage Holders:
§ Always be aware of the prevailing return, so that you know exactly how much your payments are.
§ Shop around different mortgage companies until you find the one with the best terms for you.
§ Be aware of the current market price of your property, in case you want to sell.
§ If you are interested in upgrading to a better home, keep your eye out for improved properties as well as better mortgage offers.
Tips for Investors in Real Estate:
§ Be sure to invest in properties that are registered or liable to be registered.
§ Obtain the fair value for the property by going through an official appraiser.
§ Investigate previous price trends in the area in which you're thinking of buying.
§ Acquire the property with a mortgage.
§ Wait for prices to go up, and then sell the property at the appreciated value. You can use the amount received to pay off your loan while pocketing the balance as profit.
Source: Mortgage Finance Authority
