Curious about installment plans in the UAE? Mercury Group CEO Answers Your Questions!
Beginning investors are often surprised that the main way to buy real estate in the UAE is 0% installments, not a mortgage.
They are looking for a catch, but these offers are not a marketing ploy by developers. Mercury Group Director Irina Alazova talks about all the nuances of installments in the UAE.
What is an installment plan for purchasing real estate?
An installment plan is typically available only for off-plan projects. It allows you to secure a property at a fixed price by paying a certain percentage upfront at the time of booking.
The initial down payment usually ranges from 10–20%, with subsequent payments spread out over the entire construction period. The payment schedule and amounts depend on the developer and the terms they offer. On average, the construction period for a property is 2–4 years.
There are two types of installment plans:
Common Features for Both Types:
- At launch, a refundable deposit of €2,000–10,000 (Expression of Interest, or EOI) is required to confirm your interest.
- After signing the agreement, fixed fractional payments are made according to a schedule outlined in the reservation contract until construction is completed.
1. Remaining Payment After Handover:
The remaining balance is paid after the property is completed and before receiving the keys.
2. Post-Handover Installments (Unique to the UAE):
Some developers in the UAE offer the option to pay the remaining balance over several years after receiving the keys. You can rent out the property immediately and use the rental income to cover the installments, eliminating the need for a mortgage. Note that this option is not available in any other country.
Why is this important for investors?
New investors are often surprised to learn that installment plans, not mortgages, are the primary method of purchasing real estate in the UAE, although mortgages are also available for non-residents.
Advantages of Installment Plans:
- No interest on payments.
- Flexible payment terms tailored to the construction timeline.
- No creditworthiness checks for the buyer.
- Ability to resell the reservation before the full amount is paid.
This approach makes investing in off-plan real estate particularly attractive and accessible.