The real estate boom in Dubai opens a lot of doors among investors and homeowners. Of course, the primary reason is off-plan investment. More than 60% of Dubai property transactions are off-plan. In an off-plan investment, the buyer buys the property when it is still under construction. This kind of investment works mainly on the concept of reduced costs and very good return on investment. However, financing options might be a little restricted since not all financial institutions are that keen on financing properties that are still on the planning stage and yet to be completed.

Let us discuss off-plan properties in Dubai, options available on the mortgage front, and how one could secure finance for such investments.

What are Off-Plan Properties in Dubai?

Off-plan property is that which is sold by developers prior to its full construction. In off-plan sales, investment is founded on its model, blueprints, and features. People are attracted to off-plan property since for them the prices are relatively low, with an overall potential of high rates of return when it is completed.

The conditions agreed to by SPA would comprise a date for handover or phased payments should be there, and among those terms may be a date for handover or phased payment plans. After the construction nears completion, according to the SPA; payments have been rendered then you transfer the ownership to that individual.

The current popularity for off-plan purchase is mainly due to low prices, large options of flexible payment arrangements, and thus considered suitable as an investment opportunity as well as preparing for the purchase of the dream home in Dubai in the near future.

Can I Get a Mortgage for Off-Plan Properties in Dubai?

Generally, a property can be mortgaged off-plan, though this is only possible under conditions as expected. Among the leading considerations one should look at while applying for an off-plan mortgage in Dubai include:

LTV Loan to Value Ratio Minimum of 50% LTV is available by the banks for off-plan mortgages. Therefore the minimum amount of down payment will be 50%. In case the property bought is an off-plan property and its cost is AED 10,000,000, then the loan amount will not exceed AED 5,000,000. So, it means that AED 5,000,000 will be paid as a down payment.

Selective lender choices: There are not all the banks in Dubai which offer off-plan mortgages as there is risk associated with lending on construction projects. Whatever may be the case, most of the banks offering off-plan mortgages seem to finance only such projects by tier-1, high-profile developers.

Fit to Tight Specifications: Some of the high-risk off-plan mortgages are placed on strict eligibility criteria, which is almost regular scrutiny of the project and the developer. Find a good mortgage advisor who would totally ease out the process of approval.

Off-Plan Mortgages in Dubai Types

There are mixed options on the mortgages of off-plan properties in Dubai, and the two largest lead off first. Both have terms regarding the structure of interest, which might make a difference for your money throughout the loan period.

1. Fixed Rate Mortgages

This is the rate of interest attached at the time when the loan is issued and does not change with time for the loan. Here, the type of mortgage gives stability as the monthly payments will remain unchanged by change in the interest rates.

For instance, you would specifically know how much you would be paying every month in case you draw a mortgage on an off-plan property quoted as a fixed rate of 4% over 10 years; it can thus come very handy at the moment you begin making more long-term financial planning.

2. Variable-Rate Mortgages

These variable-rate mortgages vary with market conditions, although often they are indexed to the Emirates Interbank Offered Rate, so your monthly mortgage is bound to rise and fall with the economic weather.

This would prove quite suitable for investors who think that the rates will drop in the near term or who are willing to take higher risks and receive most likely lower, first payments. Of course, one should be prepared for possible monthly payment fluctuation.

Application process of Off-Plan Mortgage in Dubai

A practically very complicated process of off-plan mortgage is due to the relatively few lenders. Still, it is a bit relieved by mortgage advisory services, which also takes you to what would best fit your needs.

Visit the Site: You will need to enroll on the authentic website.

Process Staring with: Start with websites.

Providing the Essentials: All you need to do is answer simple questions that refer to your personal and target property buying history.

Matching with a Mortgage Advisor: As per your answers, you shall be matched up with the right mortgage advisor. Then on the basis of the same, he can advise.

Case Review: The advisor will clarify more on the need and will suggest which lenders to choose the mortgage.

Lender Advice: Lender advice, which is about the interest rates, terms, and any other features that each mortgage offer should have, will be given to you.

Right Mortgage: From there, other paperworks will be formed by your advisor after finalizing your mortgage.

Sign and Close: Many websites would help sign the agreement except opening an account. They scan the mortgage offer letter for an apt explanation of their terms before signing on to it.

Professional advice would make going about the intricacies of off-plan mortgages much easier.

​​Conclusion

It may even mean the difference between life and death while trying to stake a claim over property in Dubai, more so if this actually does go on to meet fairly reasonable return-on-investment potential from the market. It’s going to involve reasonably complex finance at times, but it will all become much less of a headache if you have an idea of what is available and see how to work with some trusted advisors. After balancing your perceived advantages against a thought of possible risk factors, you will find that you would be more than glad to make an informed decision and lay the foundations for what may well prove a real success story in Dubai real estate.

FAQ

1. What Is the Antonym of an Off-Plan Property?

One is ready property, meaning the opposite of an off-plan property because it is all ready and available for handover. Ready properties are the ones that are generally financed with low down payments and are considered for those wanting their property faster or with fewer risks.

2. How can I sell my off-plan property in Dubai?

In fact you can sell off-plan in Dubai even before the property is finished. Developers are likely to argue that you should not sell until at least 30-40% of the purchase price has been paid. Sometimes you may want to know if their requirement will vary from one developer to another so be sure to ask.

3. How are mortgage payments calculated?

You can use an online mortgage calculator inputting the value of the property, down payment, interest rates, and term of the loan, to calculate your different monthly payments. Just input these into the calculator and it will give you a rough split of different monthly mortgage costs.