The real estate market of Dubai is very investor-friendly. There are numerous commercial and residential projects available for investors to buy at reasonable rates. For this, some developers offer you several payment plans. These payment plans help attract buyers, especially investors from Dubai and from all over the world. If you understand different types of payment plans for buying a property in Dubai, it will be easy to make informed and affordable decisions that match your financial capabilities. Moreover, it will also help you in fulfilling the investment goals and get a good return on It.
This guide will explain the common types of payment plans that are used for purchasing property in Dubai.
Types of Payment Plans in Dubai:
Here are the various payment plans in Dubai which provide you with affordable and convenient options. This helps first-time buyers get a very useful opportunity to buy property in Dubai. This is because the buyers have to pay only less upfront cost and the remaining is done in installments. So, get to know about these payment options in Dubai.
1) Post Hand Over Payment Plans:
The post-handover payment plan is a type of plan that offers convenience to the buyers to pay a small amount of the price of the property at the time of construction. Then, they have to clear the remaining amount once they get the property in their name. Normally, 20-40% of the payment is provided to the seller during the construction phase, and the remaining payment is made in installments for a period of 3 to 5 years. Following are some of the benefits of this post-hand overpayment plan:
- It provides the buyers more time to arrange the money according to their financial capabilities over a longer period. Moreover, it also helps in managing the cash flow for the buyers.
- This payment plan helps in making a small initial investment. It helps in eventually securing a property of a large amount.
- There is no requirement for a mortgage at the initial stage, which helps in reducing the financial burden for the buyers.
Payment Breakdown for For a studio apartment worth AED 800,000:
- Booking Fee (10%) – AED 80,000 (At booking)
- During Construction (50%) – AED 400,000 (Paid in installments until completion)
- Post-Handover (40%) – AED 320,000 (Paid over 3–5 years after possession)
Post-Handover Schedule (40% in 4 years):
- Year 1: AED 80,000 (Quarterly payments of AED 20,000)
- Year 2: AED 80,000 (Quarterly payments of AED 20,000)
- Year 3: AED 80,000 (Quarterly payments of AED 20,000)
- Year 4: AED 80,000 (Quarterly payments of AED 20,000)
2) 70/30 and 60/40 Payment Plan:
This payment plan includes paying a large percentage of money during the construction phase while the small amount is paid in installments on handover. In this payment method, 60-70% of the payment is done initially while the remaining 30-40% is done when the property is handed over to the buyer. It provides the purchasers with the following benefits:
- After the handover of the property, the buyers will get less financial burden.
- When the buyers are given a high initial cost, then the sellers also provide them with discounts and incentives. This helps in making informed and affordable purchases.
3) Mortgage Payment Plans:
The mortgage payment plans help the purchasers to get their property through the bank loan. It helps in paying for the property in monthly installments for numerous years. It includes payment of a minimum amount as the down payment. This amount is set according to the mortgage rules and regulations of the UAE. In this payment plan, the major amount is financed by the bank, and repayment is made by the buyer in 10-20 years. So, this is a good time span for paying the remaining amount. It offers you with following benefits:
- This payment method provides the buyers with ease of long-term financing in installments.
- It helps prevent the purchaser from paying the full price.
Mortgage Payment Plan for studio worth 1,000,000:
- Loan Amount: AED 1,000,000
- Loan Tenure: 20 years
- Interest Rate: 6.18% (1.19% fixed margin + 4.99% 3-month EIBOR)
- Monthly Installment: AED 7,266
Breakdown of Monthly Payments:
Month 1
- Principal Repayment: AED 2,119
- Interest Payment: AED 5,147
- Outstanding Balance After Payment: AED 997,881
Month 2
- Principal Repayment: AED 2,130
- Interest Payment: AED 5,136
- Outstanding Balance After Payment: AED 995,750
Month 3
- Principal Repayment: AED 2,141
- Interest Payment: AED 5,125
- Outstanding Balance After Payment: AED 993,609
This mortgage follows a variable rate plan. So, the interest rate changes and it depends on the 3-month EIBOR (Emirates Interbank Offered Rate). It can also have an effect on the monthly payments.
4) Developer Specific Payment Plans:
These are the payment plans for the buyers which are customized. This plan is provided by the developers to attract a large number of investors in the UAE. The terms and conditions for this payment plan are based on the developer and the type of the project. Following are the benefits of choosing this developer specific payment plan.
- This plan offers fewer requirements for the initial payment. It helps them in purchasing the property with less down payment.
- It also provides the investors with incentives and discounts.
- The terms and conditions are also customizable according to the buyer’s needs.
Example:
Damac Lagoon Views Apartments
- Flexible 2-year and 4-year plans
- Deposit: 24% upfront
- Monthly payments: 1% installments, with key milestone payments of 8%
- Completion payments: 80% and 90% completion payments of 1%, and 20% on final handover
Utopia Villas (Damac Hills)
- 2-year and 4-year plans
- Deposit: 24% upfront
- Installments: 1% monthly, with larger payments (8%) at key stages
- Final payment: 40% upon completion
Damac Casa Tower
- 2-year, 4-year, and 6-month payment plans
- Deposit: 24% upfront
- Subsequent payments: Small monthly installments of 1% for most months
- Final installment: 40% on completion
5) Rent to Own Payment Plans:
This payment plan is a bit different from others. It includes living in the house on rent with the opportunity to convert property into ownership over time.
Moreover, it is also beneficial because it does not require any down payment at the time of purchasing or taking it on rent. Along with this, the people can also get complete ownership of the property once their time span and the remaining payment is completed.
Example of Emaar’s Rent-to-Own Plan for Apartments in Dubai Hills Estate:
Property: 2-Bedroom Apartment in Dubai Hills Estate
- Market Price: AED 2,000,000
- Lease Duration: 5 years
- Initial Down Payment: AED 100,000 (5%)
- Monthly Rent: AED 12,000 (40% of rent goes toward ownership)
Payment Breakdown:
- Year 1-5: Monthly rent of AED 12,000
- AED 7,200 goes toward rent
- AED 4,800 is credited toward ownership
- End of Year 5:
- Total rent paid: AED 720,000
- Total amount credited toward purchase: AED 288,000
- Final Payment to Own the Property:
- Remaining balance = AED 2,000,000 – (AED 100,000 + AED 288,000) = AED 1,612,000
- Buyer can either pay this amount in cash or apply for a mortgage.
Following are some of the benefits you can face while choosing this payment plan:
- It provides flexibility to the buyers In providing them time to clear the remaining amount.
- It offers you an easy conversion from renting to owning the property.
- There is no requirement for a large down payment. So, people who are short of money can also afford to buy through this payment plan.
Conclusion:
There are various types of payment plans for buying a property in Dubai. They offer flexibility to the buyers in buying their own property with convenience and monthly installments. So, people can easily purchase a property in Dubai even if they have less payment to pay as an upfront cost.