Dubai’s booming real estate market boasts opportunities for investors. An interesting fact is that over 60% of property purchases in Dubai are off-plan. Off-plan properties are a rising trend in Dubai due to the low prices and high ROI. The downside, however, is limited financing and off-plan mortgage options due to associated risks.
Today, we will answer the most searched query, ‘Can I get a mortgage for off-plan properties in Dubai?’ Keep reading to find out more!
- What Are Off-Plan Properties in Dubai
- Can You Get a Mortgage for Off-Plan Properties in Dubai
- What Are the Types of Off-Plan Mortgages in Dubai
- How Can You Easily Apply for an Off-Plan Mortgage in Dubai
- FAQs
What Are Off-Plan Properties in Dubai?
Buying an off-plan property in Dubai means you are investing in an under-construction project. Developers sell these properties based on their 3D models, project plans, and property specifications. Such projects have a set handover date, payment plans, and construction phases.
A buyer does not receive off-plan property ownership until the completion of the construction phase. On completion, the developer hands over the property ownership per the Sale and Purchase Agreement (SPA).
In addition, off-plan properties are a growing trend in the real estate market, offering enticing opportunities to investors. The main reasons are the low prices and high Return on Investment (ROI). Adding to this are the various payment plans offering the highest degree of flexibility.
Can You Get a Mortgage for Off-Plan Properties in Dubai?
Yes, you can get a mortgage for off-plan properties in Dubai. This is probably the most searched question regarding off-plan properties. Let’s uncover the facts surrounding off-plan properties.
There are mortgage options available for off-plan properties in Dubai. This flexibility allows people to invest more in off-plan real estate. But wait! There are certain conditions of off-plan property mortgages that you should know.
- Off-plan property mortgages are limited to a 50% loan-to-value ratio (LTV). If you purchase an off-plan property in Dubai Marina at AED 20,000,000, the mortgage value cannot be over AED 10,000,000.
- A 50% downpayment is necessary for off-plan property purchases but can range higher depending on the project.
- Not all banks offer off-plan property mortgages due to the potential risks involved. Banks will finance selective off-plan projects based on the scrutiny of project specifications. Off-plan property mortgages are mainly restricted to tier 1 property developers such as:
- Emaar
- Nakheel
- Dubai Properties
- Meraas
What Are the Types of Off-Plan Mortgages in Dubai?
Banks offer mortgages with varying interest and principal amount payment processes. Understanding interest rates in off-plan mortgages is crucial and helps make financially beneficial decisions.
Moreover, choosing the right off-plan mortgage type saves you from future hassles. Let’s have a look at the main off-plan mortgage types:
1. Fixed-Rate Mortgages
The borrower has to pay a fixed interest rate under this mortgage as per the agreement with the bank. This rate will remain the same throughout the mortgage period. It is beneficial in the long term as it prevents sudden hikes in interest rates.
For example, suppose you buy an off-plan property in an upcoming project, Verdana Residence 2. You get a mortgage at a fixed rate of 4% for 10 years. This means the interest rate for an off-plan mortgage will remain the same for 10 years.
2. Variable-Rate Mortgages
If a property investor buys a variable-rate off-plan property mortgage, the interest payable will vary too. In this case, the interest depends on the market situation and inflation. The interest rate also depends on the Emirates Interbank Offered Rate (EIBOR).
For Example: Buying an off-plan property in Dubai’s ‘Tiger Sky Tower’ on a variable off-plan mortgage means the interest rate can change.
How Can You Easily Apply for an Off-Plan Mortgage in Dubai?
Finding and applying for off-plan property mortgages can be a daunting task. This is mainly due to limited off-plan lenders in the market. Whether you are looking for a commercial mortgage or a residential off-plan mortgage, Mortgage Finder has it all.
Mortgage Finder works with 20+ lenders, including top banks, to find the perfect mortgage option for you.
You can easily visit Mortgage Finder and follow the below process to get a mortgage for your dream off-plan property:
- Visit the official website of ‘Mortgage Finder’.
- Scroll down and Click on ‘Get Started with Mortgage Finder’ to initiate the process.
- Answer a few simple questions regarding yourself and your off-plan property purchase.
- After reviewing your answers, Mortgage Finder will connect you to a relevant mortgage broker or advisor.
- The advisor will guide you on the process while understanding your background and your off-plan property of interest.
- The advisors will review your case and search for the best and most relevant mortgage lenders (banks) in the market.
- Mortgage Finder will provide you with mortgage lender recommendations with sufficient information, including the pros and cons of each one. This includes the offered interest rates and the type of off-plan property mortgage.
- Once you decide on the right option, advisors proceed with arranging and sending your documents according to the bank’s requirements.
- Mortgage Finder will then help you sign up for MOUs and open bank accounts.
- The team will also review the mortgage offer letter before you sign it to avoid any future hassle.
- All set!
FAQs
In contrast to under-construction off-plan properties, ready properties are completed ones that are ready to be moved into and can easily be financed. However, off-plan projects offer different types of property payment plans and the ROI may increase over time.
Yes, a property owner can sell an off-plan property in Dubai. This is acceptable, provided the buyer pays at least 30-40% of the total property amount. The percentage varies according to the project and developer.
No need to do it manually. Visit Mortgage Calculator and enter the property purchase price, down payment, and loan period. This way, you can calculate monthly estimated payments and interest rates.
Real estate investors can invest in their dream projects in Dubai by relying on off-plan property mortgages. Mortgage Finder can help you find the perfect mortgage option for your investment. You can also use the Affordability Calculator to determine how much mortgage you can borrow and the ideal property value.
Furthermore, here are the top off-plan property projects in Dubai in which to invest.
