Introduction
Buying an apartment in Dubai on installments has become a smart choice for many. It offers flexibility and opens doors to prime locations without needing a big upfront payment. But how does it work? In this guide, we’ll walk you through the process step by step, from why it’s popular to how to do it. We’ll also explore different payment options and the role of real estate agents. Whether you’re a first-time buyer or an experienced investor, this guide will help you understand and navigate the world of buying property on installments in Dubai. Let’s get started!
Why Buy an Apartment on Installments in Dubai?
Buying an apartment on installments in Dubai offers several advantages. Here’s why it’s a popular choice
- Financial Flexibility: Buying property on installments allows individuals to spread out the cost of their investment over time, making it more manageable and affordable, especially for those who may not have the full purchase amount upfront.
- Access to Prime Locations: With installment options, buyers can access properties in prime locations across Dubai, including coveted areas like Dubai Marina, Downtown Dubai, and Palm Jumeirah, without needing to make a large upfront payment.
- Diverse Payment Options: Dubai offers various installment plans to suit different financial situations and preferences, making it accessible to a wider range of investors and homeowners.
Eligibility Criteria for Buying Apartment on Installments in Dubai?
While the eligibility criteria for buying property on installments in Dubai may vary depending on the developer and project, some common requirements include
- Stable Income: While buying property on installments in Dubai, you may be required to have a stable source of income to ensure you can meet the installment payments.
- Good Credit History: A good credit history may be necessary to qualify for certain installment plans, to make sure that you can fulfill your payment obligations.
- Legal Residency: Non-residents may also be eligible to purchase property on installments in Dubai, but they may have different payment plans and required paperwork.
- Age Requirement: Buyers must be of legal age to enter into a property purchase agreement in Dubai, which is typically 21 years old.
How to Buy Apartment in Dubai on Installments?
Buying an apartment in Dubai on installments involves several steps
- Research and Selection: Research different developers and projects offering installment plans in Dubai. Consider factors such as location, amenities, payment terms, and reputation.
- Financial Assessment: Determine your budget and financial capability to ensure you can afford the installment payments. Consider factors such as down payment, monthly installments, and any additional fees or charges.
- Choose Payment Plan: Select a payment plan that aligns with your financial situation and preferences. Dubai offers various types of payment plans, including post-handover payment plans, payment during construction and delivery, rent-to-own payments, and more.
- Documentation and Legal Procedures: Once you’ve chosen a property and payment plan, review and sign the necessary documents, including the sales agreement and payment schedule. It’s essential to understand the terms and conditions before proceeding.
- Payment Schedule: Begin making installment payments according to the agreed-upon schedule. Monitor your payments and ensure timely fulfillment to avoid any penalties or complications.
- Property Handover: Upon completion of payments, the developer will hand over the property to you. Ensure all necessary documentation and legal procedures are completed for a smooth transition of ownership.
Types of Installments Options Available to Buy Apartments in Dubai
Dubai offers a variety of installment options to cater to different financial situations and preferences. When it comes to off-plan projects you almost always have the option of paying through a payment plan provided by the developer. This is further divided into on-handover payment plans and post-handover payment plans which again have different kinds of structures.
Secondary market properties on the other hand, usually require you to pay the entire value of the property upfront. You have the option of paying a down payment and mortgaging the rest of the amount through a bank.
Lets take a closer look at all of these installment options
On-handover Payment Plans
- With on-handover payment plans, buyers typically pay a certain percentage of the property’s purchase price during the construction of the property in installments over a certain period.
- The remaining balance is paid upon the handover of the property in full.
- This type of payment plan provides buyers with the flexibility to secure the property with a relatively small initial investment and pay the remaining amount upon completion.
Post-handover Payment Plans
- Post-handover payment plans allow buyers to pay the developer even after they have received the handover of the property.
- The remaining balance is paid in installments over an extended period, even after taking possession of the property.
- This type of payment plan offers buyers greater flexibility and convenience, as they can occupy the property before completing the full payment.
When it comes to flexibility both post-handover and on-handover plans offer different ratios like:
1% Payment Plan
The 1% payment plan was made famous by Danube Properties in Dubai. In this payment plan, which is mostly post-handover – you need to pay an initial downpayment to the developer after which you pay 1% of the property value each month till the completion of the property after that you continue to pay 1% per month post-handover.
90/10 Payment Plan
In a 90/10 payment plan, buyers pay 90% of the property price during the construction phase in installments set by the developer over a specified period. The remaining 10% is due after the property is completed and handed over.
80/20 Payment Plan
Under an 80/20 payment plan, buyers are required to pay 80% of the property price during the construction phase through installment payments determined by the developer. The remaining 20% is due upon completion and handover of the property..
70/30 Payment Plan
In a 70/30 payment plan, buyers pay 70% of the property price in installments during the construction phase, with the remaining 30% due after the property is completed.
60/40 Payment Plan
Under a 60/40 payment plan, buyers pay 60% of the property price in installments during the construction phase, with the remaining 40% payable after the property is completed and handed over.
50/50 Payment Plan
In a 50/50 payment plan, buyers split the property price evenly, with 50% paid during the construction phase through installment payments and the remaining 50% due after the property is completed.
Mortgage Financing
- Buyers can secure financing for their property purchase through a mortgage from a bank or financial institution.
- With a mortgage, buyers make a down payment upfront, usually ranging from 20% to 40% of the property’s purchase price, and the remaining amount is financed through the loan.
- Buyers repay the loan amount plus interest over a specified period, typically ranging from five to twenty-five years, depending on the terms of the mortgage.
Different payment options have their own pros and cons, depending on your money situation, what you like, and the type of property you want to buy. So, it’s really important to think about what works best for you before deciding on a payment plan.
Advantages and Disadvantages of Installment Plans
Advantages
- Financial Flexibility: Installment plans offer buyers the flexibility to spread out the cost of purchasing a property over time, making it more manageable and affordable.
- Access to Prime Locations: Buyers can access properties in prime locations without needing to make a large upfront payment, allowing them to invest in desirable areas across Dubai.
- Diverse Payment Options: Dubai offers various installment plans to suit different financial situations and preferences, catering to a wide range of investors and homeowners.
- Occupancy Prior to Full Payment: Certain installment plans, such as post-handover payment plans, allow buyers to occupy the property before making the final payment, providing convenience and flexibility.
Disadvantages
- Potential Interest Costs: Depending on the installment plan, buyers may incur interest costs throughout the payment period, increasing the overall cost of the property.
- Market Fluctuations: Changes in the real estate market or economic conditions may affect the value of the property during the installment period, impacting the buyer’s investment.
- Payment Obligations: Buyers must fulfill their payment obligations according to the agreed-upon schedule, and failure to do so may result in penalties or legal consequences.
- Limited Property Selection: Not all properties may be available for purchase on installment plans, limiting buyers’ choices in terms of location, size, and amenities.
Difference Between Mortgage and Post-handover Payment Plans
Mortgage
- Ownership: With a mortgage, the buyer takes out a loan from a bank or financial institution to purchase the property. The buyer owns the property from the outset but pays off the loan in installments over a specified period, including interest.
- Down Payment: A mortgage typically requires a down payment upfront, which is a percentage of the property’s purchase price. The remaining amount is financed through the loan, and the buyer repays the loan plus interest over time.
- Interest Rates: Mortgage loans often come with fixed or variable interest rates, which can affect the overall cost of the property and the buyer’s monthly payments.
Post-handover Payment Plans
- Ownership: With a post-handover payment plan, the buyer pays a portion of the property’s purchase price upfront and the remaining amount after taking possession of the property.
- Flexibility: Post-handover payment plans offer buyers flexibility in terms of payment schedule, allowing them to occupy the property before completing the full payment. This can be advantageous for buyers who wish to move in or rent out the property immediately.
- Interest-Free: Unlike mortgages, post-handover payment plans typically do not involve interest charges. However, buyers may incur administrative fees or other charges associated with the payment plan.
How A Real Estate Agents Can Help in Buying Apartments on Installment in Dubai?
Real estate agents play a crucial role in facilitating buying apartments on installments in Dubai. Here’s how they can help
- Market Knowledge: Agents have extensive knowledge of the Dubai real estate market and can provide valuable insights into available properties and installment options.
- Property Selection: Agents can help buyers identify properties that meet their criteria and preferences, including location, amenities, and budget.
- Negotiation: Agents can negotiate favorable terms on behalf of buyers, including price, payment schedule, and other terms and conditions.
- Documentation Assistance: Agents can guide buyers through the documentation and legal procedures involved in purchasing property in Dubai, ensuring all requirements are met.
- After-sales Support: Agents provide ongoing support even after the purchase is complete, addressing any concerns or issues that may arise.
List of Dubai Developers offering apartments on installments with Flexible Payment Plans
Several developers in Dubai offer apartments on installments with a variety of payment plans these developers include
- Emaar Properties
- Damac Properties
- Dubai Properties
- Nakheel Properties
- Meraas
These developers offer a range of properties with flexible payment plans to suit different budgets and preferences.
Conclusion
Buying an apartment on installments in Dubai offers numerous benefits, including financial flexibility, access to prime locations, and diverse payment options. With various installment plans available and the assistance of real estate agents, purchasing property in Dubai has become more accessible to a wider range of investors and homeowners. To buy apartment in Dubai on installment reach out to Milestone Homes – the top real estate company in Dubai. Whether you’re a first-time buyer or an experienced investor, exploring installment options can help you achieve your real estate goals in Dubai.
