Off Plan Property: Choosing Between Off Plan Mortgage & Payment Plans

Are you considering an off plan mortgage but feeling overwhelmed by the available payment plans? Let’s dive into what you need to know about financing your off plan property.
When buying off plan property, two primary financing routes stand out: off plan mortgages and post-handover payment plans. Understanding the key difference between these two options will help you make an informed choice for your investment journey.
In this guide, we’ll go through:
- How off plan mortgages work
- What post-handover payment plans is all about
- A comparison to help you choose the right financing method
- Key factors to consider when buying off plan property with a mortgage
Can I Get a Mortgage with an Off Plan in Dubai?
Yes.
Banks in Dubai have different down payment requirements for different property value and type.
For Ready Made Property:
- 20% down payment for properties valued below AED 5 million
- 30% down payment for properties valued above AED 5 million
For Off Plan Property:
Banks typically require a 50% down payment before offering a mortgage loan.
For instance, if you’re looking at an off plan property priced at AED 1 million, you’ll need to prepare:
- AED 500,000 as down payment
- The remaining AED 500,000 can be financed through a mortgage loan
If the buyer prefers not to put down 50% for an off plan, there are other payment plans offered by the developers. Keep in mind: Banks are selective about which off plan projects they finance. Premium developers like Emaar off plan properties and Meraas are typically preferred by banks.
Post-Handover Payment Plans – What’s a 30 40 30 Payment Plan?
Developers are always looking for ways to incentivise potential buyers, so let’s go through their payment plans.
In Dubai, you will hear often popular off plan payment terms: 80/20, 70/30, 60/40, 50/50, etc.
As the name suggests, the 80/20 payment plan requires buyers to pay 80% of the property value (in installments) before completion, and the remaining 20% in installments at handover, usually in 3 to 5 years.
If payment plans schedule looks like this: 30/40/30.
- This means, the developer requires 30% of payment during construction, 40% at handover, and the remaining 30% (in 2 to 3 years after handover).
The number of payment installments and due dates really depends on the project’s construction timeline, and can vary from developer to developer.
As an example, let’s take a look at a payment plan for one of Emaar off plan properties, Eden The Valley.
For this development, you’d start with a 5% down payment. Then, you’d need to make a total of 50% payment before construction completes, with the remaining to be paid in installments every 5 months over the course of 2 years.

Off Plan Mortgage vs Payment Plans – How Do I Choose?
When choosing between off plan mortgages and payment plans, there are several key criteria to consider:
1. Upfront Costs
- Mortgages for an off plan property typically require a higher down payment, typically ranging from 20-30% of the property’s value.
- Post-handover payment plans usually only require a 5-10% down payment.
2. Additional Fees
- Mortgage comes with extra fees like interest to the bank, DLD mortgage fee (0.25% of loan), mortgage application fees (1%), property insurance (0.5%), and DLD fee (4%).
- Post-handover plan has no interest charges or commissions to pay.
3. Repayment Period
- Mortgage offers flexible repayment terms up to 25 years or until age 65 for expats, 70 for UAE nationals.
- Post-handover plan typically has a shorter repayment period, typically lasting 2-5 years after handover, although some developers are extending this to be more competitive with mortgages.
4. Flexibility
- Mortgage allows buyers to customize the loan type (fixed/variable mortgage rates, interest plus capital repayment, interest-only) and potentially cancel, renew or refinance if financial situation changes.
- Post-handover plan locks buyers into the developer’s set payment schedule, offering less flexibility in repayment terms.
5. Risks
- Mortgage provides more security as banks only lend 50% of off-plan value, reducing the risk exposure.
- Post-handover plan requires buyers to continue renting elsewhere until handover if they can’t move in immediately. There is also a high risk of delays, and if the developer goes bankrupt, you could lose all your upfront deposit.
6. Eligibility
- Mortgage has age limits (21-65 for expats, 21-70 for UAE nationals) and require background checks.
- Post-handover payment plan is more inclusive, with no age limits or background checks, making them more accessible to a broader range of buyers.
Off Plan Mortgage
Off Plan Mortgage – Advantages | Off Plan Mortgage – Disadvantages |
---|---|
1. Can customize loan (fixed / variable mortgage rates, interest plus capital repayment, interest-only) | 1. Extra fees to banks & third parties (i.e. interest to bank, DLD mortgage fee 0.25% of loan, Mortgage application fees 1%, Property Insurance fee 0.5%, DLD Fee 4%) |
2. Flexible Repayments – repay up to 25 years or until 65 years for salaried expats or until 70 years for UAE nationals and self-employed expats. | 2. Higher down payment (20%) compared to post payment (5%-10%) |
3. Can cancel or renew the loan if your financial situation changes. Can be refinanced. | 3. Age limit – 21 to 65 years for salaried expats / until 70 years for UAE nationals and self-employed expats. |
Post-Handover Payment Plans
Payment Plan – Advantages | Payment Plan – Disadvantages |
---|---|
1. Investing early at lowest price, maximizing ROI | 1. Delayed completion time – need to continue renting elsewhere or delay renting it out |
2. Developers often waive portion of DLD Fee 4% to incentivise buyers | 2. Developer go bankrupt / unable to complete – Lose all deposits completely |
3. Lower upfront cost. Not required to pay any third-party fees or bank fees. | |
4. Pay 0% interest to developer | |
5. Lower down payment (5-10%) compared to mortgage plan (20%) | |
6. If buyers can’t qualify for a mortgage, post-payment is always available | |
7. More privacy. No background checks like the banks |
Off Plan Mortgage or Payment Plans?
Not every investor is a cash buyer and not every investor qualifies for an off plan mortgage.
Payment plans may seem great on the surface but delays are very likely to happen and there are more financial risks than expected, so it’s important to do your due diligence and understand your risk and rewards.
If you are an off plan buyer, here are the crucial steps to help you decide:
1. Determine how much you can afford
Carefully evaluate how much you can realistically afford, taking into account your current income, expenses, and extra fees associated with buying a home.
Here is a good read about not buying ‘too much house’ – “How Much Home Can I Afford?”
2. Determine how much cash you feel comfortable locking down as a down payment
Decide on the maximum amount of cash you feel okay with as a down payment, keeping in mind the potential opportunity cost of tying up this portion of your funds.
3. Understand the off plan payment plans
Familiarize yourself with the various payment plan options offered by developers, and find out if there are any hidden charges or clauses you need to be aware of.
For example, a payment plan based on percentage of construction completion is an attractive option, as you have some sort of assurance that the developer will not just “run away” with your money.
4. Compare off plan payment vs potential monthly mortgage payment
If you considering an off plan mortgage, compare the expected monthly payments with what you’d pay in installments with post-handover plans. This way, you can identify which option will save you the most cash for the long run.
5. Determine how much cash you need to set aside for the installments or mortgage
Determine the amount of cash you need to set aside each so that it fits comfortably within your overall budget.
6. Stick to your payment budget
Once you’ve come up with a realistic payment budget, commit to it and avoid the temptation to overextend yourself financially, even if it sounds like an attractive investment opportunity.
Conclusion
While off plan mortgages offer the advantage of spreading your payments over a longer term with potentially competitive mortgage rates, post-handover payment plans is zero interest and require less upfront costs. Making the right choice between an off plan mortgage and payment plans ultimately depends on your financial situation and investment goals.