Mortgage vs Post-Handover in The UAE: TOP-10 What Unites and Differences Both Payment Plans



Mortgage and post-handover payment plan have become extremely popular trends in the UAE real estate market. The major cities, Abu-Dhabi and Dubai, apart from touristic appeal, now offer maximum possibilities and utterly favorable conditions for those, who seek for business opportunities and money raising. Aiming for that, lots of people from all over the world move to the Emirates and need homes to live in. The demand for rent has been remained high for the recent years as well as rental cost. For now, the seize of the long-term rent is comparable to the mortgage interest, what makes buying own residence a topical issue.

What unites both schemes – Mortgages and Post Handover Payment Plan

At present the market is mature enough and rich in numerous incentives from the developers and from the banks. Actually, they make luxury homes affordable and have numerous benefits for buyers and investors. Let’s see, what unites these schemes:

  1. Both payment plans are available for the UAE nationals, expats and non-residents who are looking to purchase a residential or commercial property, or even a plot of land.
  2. Both options allow buyers to use the property right after the completion. And the investors can start receiving their ROI even before full pay off.
  3. Both Mortgage and Post-handover payment plan solutions today are available absolutely online from any part of the World with guided support by our property experts.


So, what to choose when you are looking for the most profitable option? What are the key differences?

Additional costs

First of all, mortgage client has to pay the interest to the bank and mediator which is at least 6%-10%. The banks offer a fixed rate usually set for 1-5 years, an adjustable mortgage rate or a combined version. Property insurance amounts to 0,5% of the purchase price. Banking commission for gauge of the loan applications as a rule is about 1%. Land Registration charge 4% (may vary).

Post-handover payment plan has 0% interest – buyer doesn’t pay any commission to any mediator. This payment plans for off-plan real estate save a sizeable percentage of the property price. A customer normally pays only 5-10% for booking and about 40-50% of the purchase price by installments during construction and the rest of the amount within several years after the works completed.

For the investor, a post-handover plan may appear a substantial saving, as the part of the rent is used to cover the purchase price. So, the buyer ends up saving 7% of the principle purchase price depending on the length of the post-handover plan offered by the developer. For example, if it was a 3-year post-handover plan, an average of 21% of the price would be saved, considering that a residential property offers about 7% of an annual return.

Mortgage is paid monthly on the agreed date by fixed amounts during mortgage term. From time to time banks generate attractive offers for the borrowers, altering loan rates. That is why further on mortgage can be refinanced and the burden will be lessened. Besides, it can be repaid by: interest and capital repayment mortgage, interest-only payment, part-interest only and part repayment mortgage, down payments and deposits, insurance on loan protection, repayment on variable and fixed rates.

In case of simplicity and privacy of processing

When applying for mortgage in the UAE banks you should meet a number of requirements and each bank has its own list. Some of foreigners-friendly banks: HSBC, Mashreeq, Emirates NBD.

Banks deeply check the background of applicants for mortgage including their income sources, financial commitments, dependents and lifestyle factors. Note, that some establishments approve mortgage for expats up to 75% of the property price, 80% for UAE-nationals. Pre-approval is issued after 5 days on average.

Those, who choose to buy off-plan property with a post-handover payment plan have more privacy in Dubai. Moreover some of the developers arrange a complete package: the cost of the real estate covers service and administrative fees, registration charges and commissions. In this case, people don’t need to go to DLD, to apply for pre-approval in banks and to make valuation report. Thus, it is reflected in the purchase price – it is higher, than the market price for the equal unit.

In case of longevity of repayments

Post-handover payment plans usually imply installments during 2-5 years after completion. As a recent trend, some developers extend the period of post-handover payments making it competitive to mortgage terms.

Mortgage repayment periods in the UAE are up to 25 years or until 65 years of age for salaried expats or until 70 years of age for UAE nationals and self-employed expats – depending on which comes sooner. This is a long period, but the sums are evidently smaller, than in post-handover plans, means that the duties become easier for the owner. Besides, in some banks the owner may have the option to close the credit earlier.

Amount of down payment

Mortgage in Dubai allows buyers and investors to book a property with minimum down payment of 25 % for expats and 20 % for locals. (35% for properties over AED 5 M, and if the finance is for a 2nd or subsequent property purchase then the requirement goes up to 40%).

Off-plan properties with post-handover payment plans today offer very friendly conditions to the clients: from 5 to 10% down payment, which can be a significant advantage for those who cannot afford to pay more.


Property purchase via banking mortgage is a safer and more secured option than using post-handover payment plan. Not incidentally the UAE banks will lend only 50% of an off-plan unit cost.

The weakest side of the post-handover payment scheme is possible delays during construction and the decline in property prices.

Move-in right after purchase

With mortgage buyers are free to choose from both off-plan and ready properties, which give him/her an opportunity to move-in immediately after down payment if it’s needed.

Easy to find a right property

Mortgage applicants choose from a variety of options according to the pre-approved budget, which makes the choice very clear and structured. After getting the pre-approval the customers have two months at their disposal to find a property.

Interesting to know that, the European and Arabian approaches to mortgage differ from each other. The Sharia’s Law prohibits charging of interests and the Muslims invented a sophisticated scheme, when the client makes down payment and after the purchase price agreed a bank buys property from the seller and immediately resells it to the client. The rest of the sum will be transferred interest-free, but will equal to reselling price, which will incorporate banking commission and inflation.

Tips for the first-time buyers

  1. Consider your total housing payment, not just mortgage.
  2. Aim to keep total debt payments below 40% of monthly income. Bear in mind force majeures, buy a new car, education expenditures, etc. The more you spend on your home, the less you are able to save for any other purposes.
  3. Choose a proven broker partner to guide you through all quirks of the UAE real estate market.
  4. Considering all the information related and reviewing your financial capability you will cope with making a smart choice. Our subject-matter specialists will enlighten everything what is hidden to the first-time buyers and support experienced investors.
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