Dubai off-plan payment plans explained
Every off-plan developer in Dubai sells with a staged payment plan instead of a single payment. Here's exactly how each plan works, who they suit, and how they affect your investment math.
Why developers use staged plans
Off-plan financing in Dubai is interest-free. Developers split the unit price across construction milestones and let buyers pay over 2-4 years instead of upfront. Why:
- It de-risks the developer (buyer commitment funds construction).
- It dramatically lowers the cash barrier for buyers, expanding the market.
- It's regulated: RERA requires every payment goes into an escrow account, released only against verified construction milestones.
Plans are described as three numbers (e.g. 20/60/20) representing down payment / during construction / on handover percentages of the total price.
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Plan 1 β 20/60/20 (most common)
20% down β 60% across construction milestones β 20% at handover.
Example for an AED 1.5M apartment:
- Down payment (now): AED 300,000
- During construction (split across 6-10 milestones over ~2 years): AED 900,000 total
- At handover: AED 300,000
Who it suits: balanced buyers β manageable upfront, big chunk during construction, sizeable handover payment. Most flexible β you can usually exit (sell the SPA to another buyer) after paying 30-40%.
Watch out: the AED 300K handover payment can be a shock. Plan your cash flow.
Plan 2 β 50/50 (developer-friendly)
50% during construction β 50% at handover.
Variations exist: 60/40, 40/60, 30/70. The pattern is the same β split between construction and handover, no front-loaded down payment.
Example AED 1.5M:
- During construction (over ~24 months, monthly): AED 750,000
- At handover: AED 750,000
Who it suits: investors with cash flow who don't want a big lump sum upfront. Easier on monthly budgeting.
Watch out: large handover payment. If your unit value drops at handover and you need to mortgage, you may be under-financed. Less flexible for resale before handover (some plans require 50% paid before resale is allowed).
Plan 3 β 60/40 with post-handover (most flexible)
60% before handover β 40% after handover over 2-5 years.
Increasingly popular: developers offer 2, 3 or even 5 years of post-handover instalments. You take the keys, start living or renting out, and continue paying the developer for the next few years.
Example AED 1.5M with 60/40 and 3-year post-handover:
- 60% before handover (AED 900,000)
- At handover: maybe 5-10% milestone (~AED 75,000)
- Remaining ~33% (AED 425,000) paid monthly over 36 months after handover: ~AED 11,800/month
Who it suits: end-users moving in and using rental income to cover post-handover payments. Investors planning to rent the unit and have the rent service the debt.
Watch out: title deed often isn't issued until 100% paid. You can't sell or mortgage during the post-handover period in most cases. Check the SPA carefully.
Late payment penalties
If you miss an instalment, the developer can:
- Charge a late payment fee (typically 10β12% per annum, calculated on the overdue amount, prorated daily).
- Send a formal notice and grant a grace period (usually 30 days).
- After repeated misses, terminate the SPA and forfeit up to 40% of what you've paid (rules vary by Sale & Purchase Agreement and Dubai Law 19 of 2017 governs maximum forfeiture).
In practice, developers prefer to work with buyers β short delays are usually accommodated with a polite extension request. Major distress is rare for buyers in good faith.
Resale before handover (assignment)
Most plans allow you to sell the SPA to a new buyer (an assignment) once you've paid a minimum threshold β usually 30-40% of the unit price.
Process:
- Find a buyer (or use a broker / our platform).
- Get the developer's NOC (No Objection Certificate) confirming you're up-to-date on payments.
- New buyer takes over your SPA and remaining payment schedule.
- DLD charges a 4% transfer fee on the resale price (paid by the new buyer normally).
This is how investors lock in capital gains during the construction period without waiting for handover.
Cash flow math β quick decision rules
If your goal is maximum leverage (smallest cash outlay): pick the lowest down-payment plan, ideally 10/90 or 20/80 with long post-handover.
If your goal is fastest exit / flip (sell before handover): pick a plan that lets you assign at 30% paid.
If your goal is end-use (you'll live there): post-handover plans are gold β you take the keys with only 60% paid and use rental income or salary to cover the rest.
If your goal is lowest total cost: 50/50 plans often come with the steepest developer discounts (you commit more cash, you save 3-5% off the price).
FAQ
Is the payment plan interest-free?
Can I get a mortgage to cover the handover payment?
What happens if construction is delayed by 12 months?
Can I change the payment plan after signing?
Are post-handover plans really worth it?
Do all developers offer the same plans?
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