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In Dubai's ever-evolving property market landscape, a transformative trend has taken center stage – the widespread adoption of the 1% payment plan. This innovative financing approach is reshaping the dynamics of property ownership, making it more accessible and appealing to a broader spectrum of buyers and investors.
Join us as we delve into this game-changing payment plan's intricacies, exploring how developers embrace it, the implications for end-users, and the broader impact on Dubai's real estate landscape. Discover the factors driving this phenomenon and understand why the 1% monthly payment plan is a key player in the city's dynamic property market.
Discover more about Dubai’s real estate trends & news at Dubai This Week News.
The 1% payment plan in Dubai is a financing option, allowing property buyers to make a minimal initial payment and then pay the remaining balance in monthly installments equivalent to 1% of the property's total value.
For instance, when you buy a million-dirham property, you can be required to pay AED 10k per month for 100 months, which is approximately eight years. Much better than paying 25% (AED 250,000) and a 3% mortgage interest rate per month (AED 3,735) on a 25-year mortgage.
Developers in Dubai employ the 1% payment plan as a strategy to attract a higher number of buyers and investors to engage with their projects. The 1% direct-from-developer deals are seeing a lot of buyer participation, and some developers are even going for under 1%.
Prestigious property developers in Dubai, like Danube Properties, offer a convenient 1% payment plan for their off-plan projects, such as the newly introduced Bayz 101 in Business Bay.
How Does It Work?
The 1% Payment Plan in Dubai involves property developers collaborating with banks or financial institutions to facilitate funding. Under this arrangement, a buyer enters into a contractual agreement with the developer and the bank, committing to a monthly payment of 1% of the property's ownership.
Upon reaching the milestone of paying 50% of the property's total price, the buyer gains possession of the title deed, enhancing their sense of security and flexibility.
It's important to note that the percentage required for obtaining title deeds may vary among different builders, with some opting for figures ranging from 25 to 30 percent.
In 2024, Dubai is expected to witness the widespread adoption of the 1% monthly payment plan across its property market. For the first time, even villa projects are incorporating this offer. It can be particularly attractive to end-users and investors looking for flexibility and affordability in the dynamic Dubai real estate market.
This plan is designed to make property ownership more accessible by providing a gradual and manageable payment approach, especially for those who don’t have a substantial upfront amount to pay. The 1 percent payment plan creates a rent-to-own scenario where, rather than paying rent, you can pay 1% of the entire house price each month. This unique approach allows buyers to acquire luxury properties in Dubai from the outset.
These are some reasons why property experts in the Emirates consider a 1 percent payment plan a highly effective strategy to attract end-user buyers for off-plan properties. There is a growing expectation that 2024 may mark the resurgence of end-user purchasing, emphasizing developers' importance in providing affordable and convenient payment plans.
Note that approval for the 1% payment plan is contingent upon endorsement from the developer, the bank, and a scrutiny of your credit history and income. To qualify for the criteria, you must submit documents like bank statements, salary slips, or proof of residence. Furthermore, there could be additional charges, such as a booking fee, registration fee, and transfer fee, associated with this plan.
With the remarkable demand-driven growth in the off-plan sector, Dubai property developers need innovative offers like the 1 percent monthly plan to attract buyers and investors.
Yes. Those with existing mortgage payments on their property buys can switch to the 1 percent plan in Dubai. A few banks have also introduced cutting-edge products to encourage the mortgage buyout process with minimum switching costs for the property owner.
The exit cost with the existing bank is either 1 percent or AED 10,000. Typically, this expense is included in the liability letter and ultimately added to the new loan amount. Additionally, there is a valuation fee ranging from AED 2,500 to AED 3,000. In addition, there are further registration charges for the new loan amount and other additional costs.
Calculating the 1% rule is straightforward. Just take the property's purchase price and multiply it by 1%. Position the comma of the purchase price two lines to the right. The obtained figure represents the minimum monthly rent you should consider charging. Also, factor in any repair costs required for the house by adding them to the overall house price and then applying the 1% calculation.
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