Payment Options for Property Purchase in Dubai

pointers that can help to find the best payment option to suit you

Dubai’s realty sector offers a wide variety of state-of-the-art properties from townhouses or villas to apartments in secure complexes. Great houses with community-living and proximity to entertainment, recreation, and retail options are available for purchase with great payment options, even to foreigners. The real estate market regulations allow anyone to purchase a property in Dubai. If you have the funds, buying a property is relatively straightforward.

Once you have determined the type of property which interests you the most, you can contact a reliable agent to take a tour and check out the payment options to purchase the property from the developer.  . If you are a foreigner, it is a good idea to consider the fluctuations in the exchange rates of the currency as well.

If you are considering buying a property in Dubai, here are a couple of pointers that can help you opt for the best payment option to suit you.

1. Cash

If you wish to keep the debts at bay, buying a home with cash might come to you as the most natural thought. It might be a financially smart decision to invest as much cash into the property as possible to incur minimum debts. These are the couple of pros which work in favor of cash payment:

• Apart from the benefit of ease and convenience of payment, the best part about paying for your home with cash is that your payment will be completely interest-free.
• It also eases the burden of paperwork for your property.
• However, that’s not all; if you are offering the payment in cash, the developers might be willing to negotiate further on the purchase price.

Although the cash payment option is great for the financial health of the buyer, it is only convenient if the buyer has high liquidity. It is also not affordable for everyone, thus not suitable for all.

2. Mortgage

For people who are not willing to tie-down a lot of cash with the property purchase, obtaining financing is a great option. Factors determining your mortgage eligibility and approval include your credit score as well as the net worth of the home, among others. A mortgage has the following pros which make it a great financing options:

1. It comes with easy and affordable payment plans. In the UAE, the longest term available for repayment is 25 years.
2. It helps maintain your liquidity as a buyer.
3. Since mortgages make payment possible in one shot, it creates possibilities of getting discounts from the developers.
4. The payment of mortgages also provides tax benefits to the homeowners.

On the other hand, mortgages also have the following cons:

1. There is a lot of paperwork associated with mortgages.
2. Mortgages are dependent on your credit score.
3. The down payments for mortgages are hefty and the interest means paying more than the net worth of the property. (In the UAE, mortgages are limited to a loan-to-value ratio of 80% (for citizens), and 75% (for expatriates) for all purchases of first home residential properties up to AED 5 million, and 70% and 65%, respectively, for properties over AED 5 million. Second and subsequent properties have more stringent lending criteria and off-plan purchases are limited to 50% mortgages.)

3. Payment Plans

Typically, most developers offer a wide variety of payment plans. Here are a couple of pros which make payment plans a great choice for payments:

1. There are developers who offer post-handover payment plans which means that you could lease the property and pay off with the rental income.
2. The paperwork associated with payment plans are easier than mortgages

However, as compared to the other payment options, the payment to be made may be in bigger percentages as compared to the mortgages.

Other disadvantages of payment plans are:

1. The payment period is shorter, 5 years, or lesser.
2. There is no room for negotiation for the amount or the duration of payment

4. Rent-to-own

An alternative way to buy a home in Dubai is to get into a rent-to-own agreement. If you like a ready-to-move-in property, you can rent it for a specific duration of time with an option to purchase the house before the term of the lease ends. The rent-to-own option comes with the following pros.

1. This option is ideal for end-users and first-time buyers.
2. This option is not financially draining for the buyers

There are certain cons which you should know as well:

1. The lease term is set for a limited duration of 3-5 years; you have to either purchase or move out at the end of the term.
2. Property prices for this option are higher than the market price
3. The rent amount may be higher compared to the rent in the area
4. You may have to pay for the maintenance and repairs of the property

A good real estate agent like Rocky Real Estate can help you have a run-through to make the right choice for payment of property that you prefer to purchase. For assistance from our specialists, you can contact us at +971 43532000