Off Plan Payment Plans Explained
Two properties with a similar purchase price can require very different amounts of cash during construction, at handover and after completion. The right comparison is not how much the property costs, but when you need to pay for it.
· 6 min read · Exclusively Off Plan
Payment plans are one of the biggest differences between off plan developments in Dubai and one of the easiest things to compare incorrectly.
Two properties with a similar purchase price can require very different amounts of cash during construction, at handover and after completion.
The right comparison is not simply how much the property costs, but when you need to pay for it.
Construction-linked payment plans
With a construction-linked payment plan, instalments become due as the development reaches defined construction milestones.
Rather than every payment being tied to a fixed calendar date, your payment schedule follows the progress of the build. If construction progresses quickly, instalments may also become payable more quickly.
Best suited to: Buyers who have sufficient liquidity available throughout the construction period and are comfortable with payments being linked to build progress.
60/40, 70/30 and 80/20 payment plans
These plans split the purchase price between payments made during construction and a final amount payable at or around handover.
For example:
- 60/40: 60% paid during construction and 40% at handover
- 70/30: 70% paid during construction and 30% at handover
- 80/20: 80% paid during construction and 20% at handover
The individual instalments within the construction period will vary by development.
A 60/40 plan requires less capital during construction but leaves a larger amount to fund at handover. An 80/20 plan requires more capital earlier but reduces the final handover payment.
Neither structure is automatically better. The important question is which payment schedule works best with your available capital and financing strategy.
Post-handover payment plans
A post-handover payment plan allows part of the purchase price to be paid after the property has been completed and handed over.
Depending on the development, the remaining balance may be spread over a number of months or years.
This can reduce the amount of capital required at handover and, once the property is completed and available to lease, rental income may help offset the remaining instalments.
Post-handover plans can sometimes be reflected in the property's headline price, so it is important to compare the overall purchase price as well as the convenience of the extended payment terms.
How should you compare payment plans?
Put each payment plan side by side and focus on three numbers:
1. Cash required before handover
How much of the purchase price will you need to fund during construction?
2. Cash required at handover
How large is the final payment and where will those funds come from? If you are planning to use mortgage finance, this needs to be considered before you reserve.
3. Cash required after handover
If the development offers a post-handover plan, how much remains outstanding, over what period and how might this compare with potential rental income?
A payment plan that appears attractive because it requires less cash during construction may simply move a larger financial commitment to handover. Understanding the full schedule from reservation through to final payment gives you a much clearer picture.
Using a mortgage for an off plan purchase
If you intend to use a mortgage to fund part of your off plan purchase, speak to us before you reserve.
Mortgage availability can depend on the development, developer, stage of construction, lender criteria and your individual financial circumstances. Financing should therefore be considered alongside the payment plan rather than as a separate decision.
A 60/40 structure, for example, leaves a significantly larger amount to fund at handover than an 80/20 structure. Knowing your likely borrowing position in advance can help you choose a property and payment plan that work together.
Look beyond the headline offer
A longer payment plan, smaller booking amount or lower construction instalments can look attractive, but the best structure depends on your individual circumstances and investment strategy.
Before reserving, understand:
- how much you will pay during construction
- what becomes due at handover
- whether you intend to use mortgage finance
- whether payments continue after handover
- the total purchase price attached to the payment plan
We compare the property, payment plan and financing requirements together, helping you understand the full financial commitment before you reserve.
Need a mortgage? Speak to us before you reserve so we can help you understand your finance options and get your borrowing position in place first.