A good developer payment plan is the closest thing Dubai real estate has to a free interest-only mortgage. A bad one is a trap with a bow on it.
A payment plan is the structured schedule across which a buyer pays for an off-plan property — booking fee, milestone instalments during construction, the handover instalment, and sometimes a post-handover tail spread over 2-5 years. The most common Dubai structures today are 60/40 (60% during construction, 40% at handover), 50/50, 70/30, and the increasingly popular 20/80 (20% during construction, 80% over 5-8 years post-handover).
The useful mental model: a post-handover plan is effectively the developer extending you a zero- or low-interest loan against the unit. On a AED 1.5M unit with a 20/80 plan, you’re deferring AED 1.2M at no interest for five years — a gift worth roughly AED 300k at current mortgage rates, if the developer’s pricing hasn’t already priced it in (often they have, to the tune of 10-18%).
A client last year compared two identical-spec units in Dubai South — one at AED 1.45M cash sticker, one at AED 1.62M with 40/60 post-handover. Net of implicit finance, the post-handover plan was the better trade for his cash flow profile.
Read the plan. Model the implicit rate.
Related: Post-Handover Payment Plan, Balloon Payment, Construction-Linked Payment Plan, Payment Milestone.
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