I recently put a down payment on an apartment and I would like to share my experience. Because of the crazy market prices, living in Beirut was already out of the question. I wanted to find an apartment that was close to Beirut somehow but didn’t want to go over budget.
After going through the traditional methods (newspaper ads, real estate agents, private brokers, personal contacts etc..) and visiting apartment after apartment, I was ready to give up. However I managed, through personal contacts, to find a really great apartment outside Beirut. The good thing is that the owner of the project is a bank, so I managed to obtain a loan from them fairly quickly.
I went into this “adventure” without any guidance. Every person I’d ask would give me a different answer. The following couple of paragraphs detail my experience and what to expect when buying an apartment / house
The contract: The owner of the project prepares a contract where the payment dates are mentioned. It is expected for the potential client to put 15-20% as a down payment and pay around 10 to 15% whenever a milestone is reached.
Examples of milestones:
- Completed excavation
- Finished the concrete structure
- Finished external and internal blockwork
- Finished electrical and sanitary works
- Completed the project
The contract must stipulate a penalty clause in favor of the potential client and one in favor of the contractor. If you’re buying an apartment, make sure it exists in your contract.
This is the traditional payment method, but since not everyone has that much money in the bank, people take out loans. In this case, the agreement takes place between the contractor and the bank, and the potential client pays back the bank over the 15, 20 or 30 year period.
Some information about what to expect when dealing with the bank that could be useful to people who want to buy an apartment (I don’t have much info about Isken, but you can find out more through their website):
1- The bank will not give you a loan unless the building has been completed inside out and sub-divided officially into apartments.
2- The bank will not cover 100% of the price of the house, you will have to pay at least 20% down, sometimes more. In some cases the contractor might add 20% to the price of the house on paper to allow the buyer to obtain the full amount of the house as a loan without putting a down payment.
3- The monthly loan installment cannot exceed 1/3 of your monthly income. This can be played around with. If, for example, a couple is buying a house, they can combine their salaries to obtain a bigger loan.
4- You need to provide official papers such as your salary certificate, criminal record, passport photos, ID etc…
5- Along with your loan, you are obliged to purchase a compulsory life insurance, through the bank’s channels of course. e.g.: if you already have a life insurance policy with company ABC, the bank will not accept ABC’s terms but will force to purchase a life insurance policy from XYZ. It can range from anywhere between 200$/year up into the thousands depending on the price of the apartment.
6- Once you sign the contract, you have to pay LL155,000 to the bank in stamps.
7- The contract must be authenticated by the “Keteb 3adl”, to protect your interest. He/she takes around 20 dollars
8- You have to pay 0.3% of the price of the house to the Ministry of Finance to obtain an official version of the contract approved by the government
9- In some cases, you have to have your monthly salary transfered directly to the bank in question.
10- Registration: this is a big payment. It is 6.5% of the price of the house. e.g.: House price $200,000 then registration is $13,500. But contractors know “people” who can play around with the price of the house apparently. They lower the value of the house in paper in order to lower the registration fee
I hope this information helps in case someone is looking to buy an apartment soon!
Almost done with my loan, only 14.5 years to go! lol