Buying a home in Dubai can never go wrong, especially with such flexible options available at the current time. The launch of Dubai 1% property plan for investors has made buying a dream home such an easy task. But, how does a flexible new system work compared to the traditional Dubai Mortgages?

If you are thinking whether a house loan in Dubai is a better option, or a 1 % payment plan, this blog is ideal for you. Let us walk through both options, check the affordability, ownership timeline, long-term benefits, and risk factors for you to make an informed decision.

What is the 1% Payment Plan in Dubai?

The 1% Payment Plan in Dubai is a financing model which is introduced by the top developer in the city, Danube 1% payment plan. The option gives the buyer access to a property with a total property cost of just 1% monthly.

This spreads the payment plan for a few years, typically from 5 to 10. The minimum downpayment requirement needs to be met, and continue paying 1% monthly of the total property value. Once 50% is completed, buyers receive the title deed, which depends on the developer’s policy.

What about Dubai Mortgages?

A Dubai mortgage is a traditional loan system offered by lenders or banks to help you with the financing of property. Typically, the down payment for this ranges from 20 to 25%, and the rest is financed through a mortgage. It may take about 10 to 25 years with interest for repayment. Mortgages in the UAE are suited for ready properties that offer quick ownership rights.

1% Payment Plan Vs Dubai Mortgage: A Detailed Comparison

Let us explore the two financing models and figure out which one is a good option in your case.

AFFORDABILITY & FINANCIAL FLEXIBILITY

With a 1 % payment plan, it comes with a low entry point, with no hefty down payment option. It is ideal for those who have limited savings, or for those who’re looking for a zero-down-payment property in Dubai.

Whereas mortgages have higher initial costs due to deposits, interest, as well as fees. But it offers a long-term and structured payment plan.

CASH FLOW MANAGEMENT

The 1% payment plan keeps your monthly expenses in check, with predictability and affordability both. It helps you manage finances, as you know how much you are investing every month.

Mortgages in Dubai have higher monthly payments, as they come with interest. Therefore, as an investor, you need careful budgeting.

OWNERSHIP TIMELINE

The ownership for the 1% plan is usually given after you’ve made substantial payments, usually about 50%. This is best suited for off-plan properties.

In a mortgage, the ownership is immediate, upon agreement, even if your loan spans more than 15 years.

PROPERTY OPTIONS

A 1% payment plan is mostly suited for off-plan projects or properties in Dubai that come with a payment structure.

For Dubai mortgages, the applicable properties are ready-to-move-in homes, villas, apartments in Dubai and more.

PAYMENT TERMS

With a 1% payment plan, you are in for the short-term payment periods ranging between 5 to 10 years, with a manageable commitment.

While for longer terms, which can go up to 25 years, the mortgage is ideal, and it is for those who are ok with long-term planning.

EARLY REPAYMENT

According to the terms and conditions of the developer, they may allow early payments before the date, without getting penalties.

While in mortgage, there are options for early settlements.

RISK AND STABILITY

1% Plan: No interest or bank involvement, but risk exists if developers in Dubai delay projects. Mortgage: Stable and regulated by banks. More predictable.

Who Should Choose What?

Choose the 1% Payment Plan if:

You are looking to invest in an off-plan property in Dubai
Or you do not have sufficient funds, or large enough funds, to pay for the down payment
Or when you are looking to maintain liquidity or flexibility.
You are looking for a payment structure that does not have any interest in it.

Choose a Mortgage if:

You are planning to move into your new home right away
You are buying a property, be it a villa or an apartment, which is fully completed
You are ok to go for long-term financial planning
You want to build equity while living in the home.

What Will You Choose?

The Dubai real estate market is more dynamic than you can imagine. It offers buyers several avenues for achieving their dream of ownership in Dubai. Whether you are choosing Dubai mortgages or prefer 1% payment plan properties, both are favourable in different situations.