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Off-Plan Payment Plans In Dubai | A Comprehensive Guide

Explore our comprehensive guide on off-plan payment plans in Dubai, detailing types, pros, cons, and FAQs for informed property investment decisions

In Dubai's thriving real estate market, home buyers and investors have two options, buying a property off-plan, which means buying it before or during its construction, or buying a ready property, meaning it has already been constructed.

In 2023, Dubai's off-plan market recorded remarkable growth, with a 48% increase in transactions. With further growth expected in the market, buyers will have lots of choices of off-plan properties in 2024.

One key factor to consider when deciding whether to buy off-plan in Dubai is that the purchase will be funded either in cash or using an off-plan payment plan. In this post, we provide a comprehensive guide to off-plan payment plans, offering insights to help potential investors and home buyers decide if it is the right option for them.

What are Off-Plan Payment Plans?

Off-plan payment plans refer to the financial arrangements made for properties that are either in the process of construction or are planned to be built. These plans are designed to allow buyers to purchase a property by paying installments over an agreed period. Payment plans are popular because it is not possible to get a mortgage on an off-plan property. This means that without payment plans, it would not be possible to buy an off-plan property unless you could pay for it entirely in cash.

Different Types Of Payment Plan In Dubai

  1. Construction-Linked Plans: Payments are made at various construction milestones. This plan is ideal for those who want their payment to coincide with the progress of the building.

  2. Time-Linked Plans: Payments are scheduled at fixed intervals, regardless of construction status. This plan suits buyers who prefer a predictable payment schedule.

  3. Deferred Payment Plans: A portion of the payment is deferred until after the property's completion. This plan benefits buyers who need time to arrange finances.

  4. Standard Plans: Includes plans like 80/20, 60/40, and 50/50, where the payments are split between the construction phase and at handover. For example a 80/20 plan means you pay 80% of the purchase price in installments during the construction phase, and then 20% at the time of handover.

  5. Monthly Payment Plans: Some developers have begun offering a monthly plan, such as paying 1% of the purchase price per month over about 7 years. This is a popular option for those looking for a similar structure to a mortgage.

  6. Post-Handover Payment Plans: This option allows for a portion of the property's price to be paid after the project's completion and handover. This approach is appealing for buyers who might not be able to afford large upfront costs or prefer to manage their finances over a longer period. It allows payments to be spread out over several years post-handover, aligning with the buyer's financial planning or rental income from the property.

Pros and Cons of Off-Plan Payment Plans

There are several pros and cons of payment plans to consider when buying an off-plan property in Dubai, which we will consider in this section.

Advantages Of Off-Plan Payment Plans

The advantages of choosing an off-plan payment plan include:

  • Flexibility: Payment plans offer various options to suit different financial capabilities.

  • Lower Entry Price: Generally, off-plan properties have a lower price than the equivalent completed units.

  • Investment Potential: Off-plan properties can provide an opportunity for capital appreciation as the property value may increase by the time of completion.

Disadvantages Of Off-Plan Payment Plans

The potential drawbacks of buying off-plan using a payment plan include:

  • Project Delays: There's a risk of the project getting delayed, affecting your investment timeline.

  • Market Risk: Fluctuations in the real estate market can impact the property's value.

  • Complexity in Financing: At the time at which the property's construction is completed, the payment plan may require you to make a large final payment. You may need to get a mortgage to cover this, which adds additional complexity to the process.

Frequently Asked Questions About Payment Plans

How do down payments work for off-plan properties?

At the time of reserving an off-plan property, the developer will usually require you to make a downpayment to book the property. The downpayment amount varies by developer and project but typically ranges from 5% to 20% of the property value. This can be higher for premium properties so always check when considering off-plan properties.

What should I look for in the payment schedule of the sales agreement?

It's important to carefully review the payment schedule of the sales agreement to ensure that you fully understand the terms and that you are in a position to meet the payments on time. You should also make sure you understand the potential implications of late payments, and check for any hidden costs.

Is it possible to secure a mortgage for off-plan properties?

To secure a mortgage, banks will usually want to see a completed property so that they can assess its value and feel comfortable giving a mortgage against it. This means that it is not typically possible to secure a mortgage for an off-plan property while it is being constructed. However, you can arrange a mortgage when the property gets handed over, which can be used to finance the final payment.

What happens if the project faces delays?

Delays can affect your payment plan and investment return. It's crucial to understand the developer's policies regarding delays and whether there is any compensation offered.

What are the steps involved in the handover process?

Upon completion, you'll receive a completion certificate to confirm that construction has finished. You will then be expected to make the final payment, and then the property will be handed over to you, including the keys and necessary documentation.

Investing In Off-Plan Properties

Investing in off-plan properties in Dubai presents both opportunities and potential challenges. A thorough understanding of payment plans is essential to ensure you choose a plan that is suitable for you. Whenever making the decision to purchase an off-plan property, working with an experienced real estate agent and ensuring you choose reputable developer can significantly contribute to a rewarding investment journey.


Written by Joshua Hughes

Published on 23 January 2023

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