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Why Real Estate Payment Plan is better than Mortgage

Posted by raees ibrahim on November 3, 2023
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Payment Plan vs Mortgage

Payment Plan vs Mortgage. Dubai, with its stunning skyline and luxurious lifestyle, has become a hotspot for real estate investments. Whether you’re an expat or a local resident, owning property in this glittering city is a dream for many. While mortgages have long been the traditional route to own a home, there’s an interesting alternative in Dubai: real estate payment plans. Let’s delve into why these innovative financing options can be a game-changer, backed by statistics.

1. Interest-Free Advantage:

One of the most compelling facts about real estate payment plans in Dubai is the absence of interest charges. According to a recent study by the Dubai Land Department, the average interest rate on mortgages in Dubai hovers around 3.99%. This adds significantly to the property’s cost over the long term. In contrast, payment plans in Dubai typically offer a straightforward, interest-free solution. It results in potential long-term savings that can be substantial.

2. Accessibility for All:

Dubai’s diverse population, consisting of expats from around the world, appreciates the accessibility of real estate payment plans. A report from the Dubai Statistics Center reveals that expatriates make up over 88.52% of the city’s population. It’s a well-documented fact that these plans often don’t require the same level of stringent credit checks and approvals as mortgages. It in fact makes them a more inclusive option for a broader range of buyers.

3. Flexible Terms for Customization:

Those exploring real estate payment plans in Dubai well-recognize the fact of flexibility. A survey conducted by a leading real estate agency in the region found that 78% of potential property buyers in Dubai value the option to customize their payment structure. Unlike mortgages with their standard terms, payment plans in Dubai can often be tailored to individual needs.

4. Minimal or No Down Payment:

Many potential property owners in Dubai have been held back by the hefty down payment requirements of mortgages. The same survey mentioned above revealed that 65% of respondents cited down payment requirements as a significant obstacle to property ownership. A fact worth noting is that some payment plans in Dubai allow buyers to enter into property ownership with little to no down payment. It makes that dream home closer to reality.

5. Lower Monthly Commitments:

Without the burden of interest payments, it’s a fact that monthly payments under a real estate payment plan in Dubai are typically lower than mortgage payments for the same property. This can significantly ease the financial burden and provide room for other investments or expenses.

6. Reduced Financial Risk:

It’s a well-documented fact that mortgages often involve borrowing substantial sums of money. It leads to potential financial vulnerabilities in the event of economic downturns or personal financial crises. According to a recent report from the Dubai Chamber of Commerce, 43% of homeowners cited financial vulnerabilities as a significant concern. With real estate payment plans in Dubai, the risk is more contained, as buyers deal directly with property sellers rather than financial institutions.

7. Bank-Free Transaction:

Real estate payment plans eliminate the need for a third-party lender, simplifying the home-buying process. Those who seek a more streamlined and efficient property acquisition process appreciate this fact.

Downsides of real estate payment plans

However, it’s essential to acknowledge the potential downsides of real estate payment plans:

1. Limited Availability: The Dubai Real Estate Regulatory Authority (RERA) report indicates that individual property sellers typically offer real estate payment plans in Dubai, which means they may not be as widely available as mortgages.

2. Shorter Payment Periods: Since real estate payment plans have shorter terms, it’s a fact that the monthly payments are usually higher, which may pose a challenge for some buyers.

3. Lack of Standardization: A known fact is that the terms and structures of payment plans can vary significantly, necessitating thorough understanding of the specific plan you’re considering.

4. Limited Property Options: It’s a fact that you might have a narrower selection of properties to choose from when seeking real estate payment plans compared to what’s available through traditional mortgages.

5. Potential for Higher Total Cost: While you may save on interest payments, the fact remains that the total cost of the property might be higher in some cases if the seller charges a premium for offering a payment plan.

In conclusion, when considering property ownership in Dubai, real estate payment plans can offer an appealing alternative to mortgages. They are especially attractive for those looking to avoid interest payments, enjoy greater accessibility, and customize their payment structure. However, the decision ultimately depends on your unique financial situation and goals. Before diving into the Dubai real estate market, carefully weigh the pros and cons of both options to make an informed choice that aligns with your dreams and aspirations, supported by statistics and data.

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