This first-of-its-kind offering by leading developers provides exceptional affordability and flexibility to purchase your dream home in the Emirates. Let’s see how it works!
Dubai’s residential segment has made a remarkable rebound driven by solid demand. While new properties are launched every day, there lies an entry barrier for average-income buyers. But this new 2% monthly plan breaks all barriers and makes everything accessible.
It serves as an attractive route for first-timers and end-users to secure a valuable asset in Dubai realty with minimal recurring outflow.
What is the 2% Payment Plan?
Under this plan, buyers need to pay only 2% of the property value monthly towards installments till handover. Your purchasing power suddenly gets a 50x boost! Traditional payment schemes typically involve higher initial outflows of 5-15% followed by construction-linked plans.
This innovative 2% payment option by Dubai developers now opens doors for millennials, new expat residents and even middle-income groups to purchase ready as well as off-plan properties across budget segments from studios to family villas.
Let’s examine how it actually works and what the major benefits and considerations are before jumping in.
How the 2% Payment Plan Works
The 2% plan requires a small initial down payment, usually 5-15% of the property's value. The rest is paid monthly in installments equaling 2% of the total amount.
While specific requirements may vary between developers, the 2% plan generally involves:
Down Payment
Buyers typically pay an initial booking fee to the developer, often 5% of the property value. This secures your purchase before making any monthly payments.
Monthly Installments
Following the down payment, you pay monthly installments of 2% of the total property price. Payments go towards settling the outstanding balance until you fully own the property.
Some developers require repayments during construction, while others initiate installments at handover. For buying off-plan property, installments accrue in an escrow account until the completion date.
Title Deed
Once reaching a specified threshold of payments, usually 50% of the property value, buyers receive the title deed. This gives formal ownership earlier in the repayment period.
Example Property Purchase
To demonstrate how this works, let’s look at an example 2% payment plan purchase:
- Property Value: AED 1,000,000
- 5% Booking Fee: AED 50,000
- Monthly Installments: AED 20,000 (2% of AED 1,000,000)
- Title Deed Release: After paying AED 500,000 (50%)
With 2% monthly installments of AED 20,000, the buyer would fully own the AED 1 million property after 50 installments (50 x AED 20,000 = AED 1,000,000).
Advantages of the 2% Payment Plan
The 2% payment plan comes with several major advantages compared to traditional financing options:
Increased Affordability
The low monthly costs open property investment to buyers who lack substantial capital for large deposits. By spreading payments over many years, property becomes affordable for more purchasers in Dubai.
Potential for Rental Income
Unlike rent-to-own, buyers can generate rental income from 2% payment plan purchases before settling the full amount. This supplements installment payments for investors.
Lower Interest and Fees
By dealing directly with developers, buyers avoid the high-interest rates and arrangement fees associated with mortgages and bank financing.
Gradual Payment Period
Long repayment periods allow buyers to budget manageable monthly amounts toward ownership rather than large lump sums. This helps to relieve financial pressure.
Enhanced Flexibility
Buyers can sell a portion of the property after receiving the title deed to settle outstanding payments and free up capital for other investments.
Key Considerations
While presenting an accessible path to homeownership, the 2% payment plan does come with risks and limitations that buyers should note:
Ongoing Monthly Payments
Instead of settling 100% upfront, the 2% plan requires payments until dues are cleared. This ongoing liability should align with long-term financial planning.
Property Value Changes
The extended timeframe exposes buyers to market fluctuations over decades that could impact returns on investment.
Reliance on Developer and Bank
Buyers depend on the developer completing projects on time and the financing bank remaining solvent over long repayment periods.
Limited Choice of Properties
Not all properties in all areas provide a 2% payment plan option. The choice may be narrower, especially for more premium investments.
Strict Eligibility Criteria
Buyers must meet developer and bank criteria regarding credit scores, salary thresholds, employment status, and visa status to qualify for the 2% plan.
2% Payment Plan vs. 1% Payment Plan Comparison
We often get asked - which works better, 1% or 2% payment option? Find a clear side-by-side analysis of key differences for buyers to weigh up:
| Parameter | 2% Payment Plan | 1% Payment Plan |
|---|---|---|
| Down Payment | 5% | 5% to 20% |
| Monthly Installments | 2% of property value | 1% of property value |
| Payment Duration | Short | Long |
| Ease of Approval | Relatively easier | Depends on developer |
| Financial Burden | Moderate | Lower but variable |
| Risks | Moderate | Higher if delays happen |
The table shows that while the 1 percent payment plan offers lower installments, the 2% option allows buyers to own properties sooner fully. With higher monthly payments but less long-term risk, the 2% plan may suit investors, while the 1% appeals to budget-conscious end-users.
New Launches with 2% Payment Plan
Azizi Developments has launched residential projects in Dubai, like Azizi Venice , that offer a 2% post-handover payment plan. Located near Al Maktoum Airport , Azizi Venice features a range of affordable units.
Buildings: Lagoon, Partial Lagoon, Park, Road
Studio apartments start at AED 590,000, 1-bedroom at AED 990,000, with a 5% booking fee. Azizi permits owning units with a 2% payment plan.
Conclusion
Dubai’s real estate market is making the dream of property ownership more accessible through innovative 2% payment plans. By spreading costs over the years, buyers with less capital can gradually work towards acquiring assets.
While requiring strict financial planning and risk awareness, the 2% option opens doors for first-time and seasoned buyers. Partnering with knowledgeable real estate consultants helps you navigate Dubai’s many options to find deals that match your budget and goals.
As the market expands affordable payment choices, viable paths to profitable investment emerge across more areas and developer projects. Whether seeking rental income returns or a forever family home, the 2% plan makes owning property in Dubai a realistic target for more buyers today.
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