Dubai’s Off-Plan Property Market: Understanding Mortgage Options for Buyers in 2025

Dubai Market

1 day ago

The success of Dubai’s real estate market is known to many - it attracts investors and home buyers from all over the world. Dubai’s luxury real estate investment is favored by many due to its increasing economy, growing property sector and rapidly changing regulations. Given that the new mortgage policies are due to come into effect in 2025, the off-plan property market in Dubai is set to undergo a drastic transformation.

In this blog, we will explore which mortgage option is best for buyers in Dubai, how it affects property prices, and the current developments in mortgage financing.

Mortgage Options for Off-Plan Properties in Dubai

Dubai off-plan property investment is an exciting move, but selecting the right mortgage is the most important part. Banks offer various types of mortgages, with unique interest rates and repayment structures. Understanding these options can help you make a financially smart decision.

Here are the two main types of off-plan mortgages in Dubai -

Fixed-Rate Mortgages

A fixed-rate mortgage means that your interest rate will remain the same throughout the entire loan period. This gives you stability because your monthly payments will not change. It is a good option if you want predictable payments and do not want to be surprised by rate hikes.

For instance, if you buy an off-plan apartment in Verdana Residence 2 with a fixed 4% interest rate for 10 years, the interest will not change during the mortgage period.

Variable-Rate Mortgages

A variable-rate mortgage means that the rate of interest can change with market conditions and, additionally, with the Emirates Interbank Offered Rate (EIBOR). This may be advantageous if rates drop - otherwise, higher payments may be a result if the rates increase.

For example, if you purchase Tiger Sky Tower through a variable-rate mortgage, your interest payments may change based on the market.

The right mortgage depends on the financial goals and level of risk tolerance. Now, comparing the rates is important, and seeking guidance from mortgage experts would be a good decision.

Mortgage options for off-plan properties in Dubai have undergone considerable changes over the last few years. Thanks to some competitive interest rates from banks, buyers can now get financing and expect down payments of between 20% to 30%. In addition, some developers also provide additional payment options such as no-interest payment plans.

However, the mortgage process for off-plan properties in Dubai is not easy. Starting on February 1, 2025, the way mortgages are structured for such properties will change dramatically. The Dubai Central Bank has come out with a new directive, saying that home buyers will now have to put up certain fees at the time of purchase, which banks had been covering as part of the mortgage.

Impact of Mortgage Changes on Off-Plan Property Prices

The new mortgage regulations are expected to affect the prices of off-plan properties in Dubai to a great extent. In the first few years, buyers will pay more upfront due to the new fee structure. For instance, if a property is priced at AED 1 million, buyers must settle AED 60K DLD and brokerage fees — which makes affordability a challenge for some.

The initial financial cost may be high, but the long-term impact on the price of off-plan properties in Dubai could be positive. These new rules make off-plan projects more attractive to many buyers, who can take advantage of flexible payment plans and low upfront contributions. More and more developers are now offering great deals, such as extended payment terms and even waived DLD and brokerage fees. As a result, the market will likely see higher demand for off-plan properties, which will, in turn, put upward pressure on prices in some areas.

Moreover, the increase in demand for off-plan properties in Dubai is anticipated to boost further price appreciation of those specific areas such as Downtown Dubai, Dubai Creek Harbour, and Dubai Marina where savers can benefit from the flexibility and investment returns.

How Mortgage Options and Payment Plans Impact Property Prices?

The availability of mortgage options in Dubai has a major effect on off-plan projects in Dubai. This decreases the demand for high front loads thereby, allowing developers offering 5 to 10-year payment plans to make these properties more available to a variety of buyers. These are particularly attractive to someone who may not be able to accumulate the full amount required for a traditional mortgage and yet wants to invest in the Dubai real estate market.

This allows buyers to spread the payments over a long period relieving immediate financial burden, and hence, increasing the attractiveness of off-plan properties to investors and homeowners alike. Off-plan projects in Dubai also have payment incentives, such as zero-interest options or even post-handover payment plans, which makes them even more appealing.

Conclusion

For anyone thinking of investing in off-plan projects in Dubai, it’s advisable to plan the finances, search for suitable mortgage options, and learn about the most recent trends in the market. Investing in off-plan properties in Dubai can be fruitful if the right investment strategies are in place.

To get expert advice on the Dubai off-plan property market in 2025, contact FirstPoint Real Estate today. Our real estate agents are dedicated to helping you make informed decisions, ensuring your investment in Dubai’s real estate market is both successful and profitable. I