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Should I buy off-plan or ready properties?

We break down what off-plan and ready actually mean and lay out the pros and cons of both, so you can make an informed decision without endlessly scrolling through various articles.

A building construction of an off-plan project in Dubai

A quick search on Google and you’ll already know that people have a lot of opinions on if it’s better to buy off-plan or ready properties in the UAE. We break down what off-plan and ready actually mean and lay out the pros and cons of both, so you can make an informed decision without endlessly scrolling through various articles.

Off-plan

Firstly, what does off-plan mean? Off-plan is when you buy directly from a developer before the property has been constructed. These are not ready to move into, normally from six months to three years, after you put down your initial payment of 20-50%. You’ll then pay 50-80% in a handover payment closer to the property completion date or over 2-3 years post-completion as part of a post-handover payment plan.

Pros

  • Usually priced below current market value

  • A large part of the payment is not required until much later in the process

  • Often developers offer incentives for off-plan properties

Cons

  • You don’t get an immediate return on your investment as you have to wait until the property is complete to either rent out, move in, or sell

  • Development delays can push back handover

  • Control is out of your hands until the property is complete

  • You can never be 100% certain the final product will look as marketed

It’s also important to take into consideration potential changes in market valuation. This can work for or against you. When you buy off-plan the price of your future property will be valued at the beginning of the process. If the final market value of your purchased property when complete is less than the original valuation, and you are financing the handover payment with a mortgage, then your up front payment might be higher than what you had expected.

However, if it’s higher you may owe a smaller amount than expected. As with any investment, there is risk involved with changing market values.

Ready properties

As the name suggests, ready properties are properties that are already constructed and ready to move into. For ready properties, if you opt to purchase the property with a mortgage you will need to pay between 15%- 20% up front (the down payment) and then pay the rest of the sale price over a number of years depending on your mortgage terms and conditions.

Pros

  • You have full control of the property as soon as you purchase it

  • You can start making money by renting it out, or save on renting yourself by moving in, immediately after purchase

  • What you see is what you get

Cons

  • You pay market value

  • Full payment required up front

  • You may need additional budget for any refurbishment costs

It’s important you know what purpose you are buying a property for and your financial position as it will also inform your decision on whether you choose off-plan or ready.

If you’re looking for some advice on how to fund a property purchase, whether off-plan or ready Huspy can help you out. Our team of mortgage experts will find you the best deals based on your personal circumstances, chat to our team today.


Written by Huspy Team

Published on 2 May 2023

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