Property Buying in Dubai: 1% Payment Plan VS Mortgage

July 10, 2024

In the dynamic and ever-growing real estate market of Dubai, buyers are often faced with the crucial decision of how to finance their property purchase. Two popular options are the 1% monthly installment plan in Dubai and traditional mortgage deals. Each has its own set of advantages and disadvantages, making the choice largely dependent on individual circumstances and financial goals. This blog will delve into the specifics of both Dubai property financing options and analyze which is the best option for you.

Understanding the 1% Monthly Payment Schemes

The 1 percent payment plan Dubai is an attractive financing option offered by several developers in Dubai. Under this plan, buyers pay 1% of the property's value every month over a specified period, typically extending until the completion and handover of the property. It is one of Dubai real estate’s most flexible payment plans. There are various properties available with a 1 percent payment plan, including Park Greens, Views by Danube, and Morocco at DAMAC Lagoons. 

Here is a sample 1% payment plan in Dubai:

Payment SchedulePercentageDescription
Booking5%Initial down payment
1 Month from Booking1%First installment
2 Months from Booking1%Second installment
3 Months from Booking1%Third installment
4 Months from Booking1%Fourth installment
5 Months from Booking1%Fifth installment
6 Months from Booking1%Sixth installment
7 Months from Booking1%Seventh installment
8 Months from Booking1%Eighth installment
9 Months from Booking1%Ninth installment
10 Months from Booking1%Tenth installment
11 Months from Booking1%Eleventh installment
12 Months from Booking1%Twelfth installment
Upon Completion (Handover)70%Final payment upon property handover

This table illustrates a typical 1% payment plan structure, where small monthly payments are made until the project's completion, with a substantial final payment due upon handover. The exact percentages and timeline can vary depending on the developer and specific project.

Major Highlights

  • Low Initial Financial Burden: With only 1% of the property's value to be paid monthly, the initial financial burden on the buyer is significantly reduced, making it easier to manage cash flow.
  • No Interest or Hidden Fees: The 1% payment plan is typically offered by developers without interest or hidden charges, increasing its attractiveness.
  • Flexibility: The 1 %  payment plan often extends over several years, providing buyers with ample time to gather the necessary funds without feeling rushed.
  • Milestone-Based Payments: Payments are generally tied to construction milestones, ensuring you pay as the project progresses, and enhancing security and transparency.
  • Variety of Property Choices: The 1% payment plan applies to a wide range of properties, from apartments to villas, accommodating diverse investor preferences.
  • Developer Incentives: Many developers offer additional incentives such as waived registration fees or free service charges for a certain period.

Property Buying in Dubai Through Mortgage Loan

What is a mortgage deal? A mortgage deal involves borrowing money from a bank or financial institution to finance the purchase of a property. The buyer repays the loan over a fixed term, with interest. You can also compare the mortgage process with cash payments for buying a home in Dubai. 

Major Highlights

  • Property Ownership: Buyers gain immediate ownership of the property upon completion of the purchase process.
  • Regulated Environment: The UAE Central Bank regulates mortgages, ensuring transparent and fair practices that protect both the lender and the borrower.
  • Diverse Mortgage Products: Banks in Dubai offer a variety of mortgage products to suit different needs, including fixed-rate mortgages, adjustable-rate mortgages, and interest-only mortgages.
  • High Loan-to-Value Ratios: For first-time buyers, banks can offer loan-to-value (LTV) ratios of up to 80% for expatriates and 85% for UAE nationals. 
  • Tax Benefits: Dubai does not impose property taxes, which can significantly lower the total cost of ownership compared to other global cities. However, there are fees associated with registration and maintenance.
  • Long Repayment Periods: Mortgages in Dubai typically come with long repayment periods, often up to 25 years.

Dubai 1% Payment Plan VS Mortgage Loans | Provident Estate

A Comparative Analysis

When comparing the 1% payment plan to traditional mortgages, one of the most significant differences lies in the initial financial burden on the buyer. The 1% payment plan for purchasing off plan properties typically requires much lower initial outlays, allowing buyers to pay a small percentage of the total price monthly, which can be particularly attractive for those without the immediate means for a hefty down payment. In contrast, traditional mortgages usually require a down payment ranging from 5% to 20% of the property’s price upfront, which directly contributes to building equity in the property. This aspect of mortgages is beneficial for buyers looking to increase their net worth over time.

With a mortgage, buyers can own the property immediately upon completion of the purchase process, which means they can start benefiting from capital appreciation and use the property as they see fit. While, in a 1% payment plan, ownership is typically transferred only after a significant portion of the payment has been made, often at the end of the payment schedule.

Another key difference is the structuring of payment schedules and financial planning. The 1% payment plan offers a straightforward approach without the extensive approval processes required for mortgages. In the UAE, the mortgage or home loan approval process is governed by specific criteria set by banks. These requirements for potential borrowers include a minimum salary threshold, employment status, and tenure, as well as necessary documentation such as a residency visa and Emirates ID.

Making the Right Choice

Choosing between a 1% payment plan and a mortgage deal depends on several factors:

  • Financial Situation: Assess your current financial health. If you have a steady income and can afford a down payment, a mortgage might be suitable. However, if you need more time to gather funds, a 1% payment plan could be beneficial.
  • Long-Term Goals: Consider your long-term property goals. If you plan to stay in the property for a long period, a mortgage can help you build equity. On the other hand, if you’re looking for flexibility, a 1% payment plan offers a more manageable commitment.
  • Market Conditions: Evaluate the current real estate market conditions and interest rates. In a low-interest-rate environment, a mortgage deal can be more advantageous. Conversely, if interest rates are high, a 1% payment plan might be a better option.

Both the 1% payment plan and mortgage deals have their own sets of benefits and drawbacks. It’s crucial to understand the difference between a mortgage vs payment plan and carefully evaluate your financial situation, long-term goals, and the prevailing market conditions before making a decision. Consulting with a financial advisor or real estate expert can also provide personalized insights to guide you toward the best financing option for your Dubai property purchase.

Dubai 1% Payment Plan VS Mortgage Loans | Provident Estate


In Dubai, the maximum mortgage cap is set at 85% of the property's value for residents, 80% for expatriates, and ranges from 50% to 80% for non-residents.

Yes, you can buy a property on a mortgage in Dubai and rent it out. To rent a property in Dubai, you can list your property on Provident to find suitable tenants.

Mortgages might be preferable for long-term investments as they generally come with the benefit of property equity growth. The 1% payment plan can be appealing for shorter-term holding strategies or for those who plan to upgrade or change properties frequently.

Insight: Mortgages might be preferable for long-term investments as they generally come with the benefit of property equity growth. The 1% payment plan can be appealing for shorter-term holding strategies or for those who plan to upgrade or change properties frequently.

For more information, get in touch with us at Provident