No doubts, off plan purchases are giving worthy alternative options in today’s market with an eye-catching payment plan, together with the resilient security measures taken by the government to protect buyers’ rights. Off plan developments have been steadily budding and are accessible at lesser values. These days all most every developer is offering a lucrative payment plan, either 50:50 or 30:70 ratio or even some are offering a post-handover installment plan to entice the buyer, and so, it’s offering an ideal solution for all those who have the restrictive budget to get into the property market with low deposits.

Investing in a home, which survives only on a piece of papers sometimes sounds irrational and seems risky. But like ready it has its own pros and cons and certainly, a proper due diligence should be considered by the buyer before signing off a deal.

Research

Buying an off plan requires a tactical approach that works for many investors. The buyer must do regular research to ensure that at the end, the numbers work. One should look into the finance options, return on investment, potential growth on investment over the period of time, the depreciation effect on asset and so on before getting into the investment. Moreover, there is a range of other objectives like location, community, it’s surrounding, payment plan, developer record which should be prudently examined to make sure the investment runs smoothly.

Location & Neighborhood

Surely, project location is something very important aspect to consider when investing in an off-plan property, as it will remain persistent until the end of time. Look at landmarks, public transportation such as Metro, Tram station, nearby schools, closest supermarket, pharmacy, shopping malls, petrol station and all other amenities that you will require in general. Since the home is a permanent and a long-term investment, therefore these factors should be well taken into consideration.

Payment Plan & Price Appreciation

When buying off-plan everything revolves around the best payment plan and the value for money, buyer’s getting while investing in the project. Therefore, consider computing some cost and make a comparison to study the resale value, and capital appreciation. Payment plan certainly has a knock on effect on the property sale price and therefore, it’s vital to make sure you meet overall the objective in line with the personal liquidity estimate while selecting the payment plan.

Indeed, capital gain on Dubai property is higher than any other prime city across the world. So when you buy off-the-plan at today’s price after construction, you can likely notice that the property worth more than you paid with the market growth. So, definitely, look for price gratitude factor while selecting the project as it gives the greatest reasons that one should buy off-plan property.

Developer Credential & Construction Quality

Another crucial step before finalizing the property is to study developer credentials and look at company’s previous project delivery quality, standard, and the track record. Although, the strict government rules and regulations now in place make buying off plan properties more secure. The developer can be of any statue, what matter at the end is how well the project/house is built and serviced on the long-term. If you are buying for the first time in Dubai then its worthwhile spending for a trustworthy developer’s project that will promise the confidence on your investment.

Mortgage on off-plan

If at the later stage, you are planning to finance the purchase, it’s crucial to understand mortgage support and the choice of the mortgage options for that particular project. In Dubai, indeed, the banks do finance off-plan projects, but the facility is restricted to few lenders. And as per the Central Bank guidelines, the maximum Loan to Value for mortgages on an off- plan is 50 per cent regardless of purpose, value or category of the purchaser. If the project is listed with the bank, then only the funding process is possible during the construction else one can only obtain the mortgage at the handover stage.

To elude potential risks in an off-plan mortgage, the lender performs stringent due diligence and sanctions the mortgage approval for listed developer’s project only. Besides, once the preliminary 50 per cent is covered by the purchaser and the developer achieves the defined construction mileposts, thereafter the bank fund the balance amount. To understand the buyer’s eligibility the lender reviews the income and property documents and carry out strict affordability and stress tests to make sure he/she can repay the home loan before giving the pre-approval.

Another factor which needs to consider is that once the amount is disbursed from the lender to the developer’s escrow account, the lender charges the interest or profit on that amount, which is a bit higher during the construction period and later gets adjustable to a variable rate after the project completion.

Definitely, there is always an added risk when buying off-plan project but then the buyer needs to weigh it up. No doubts payment plans allow you to pay as you go. And if you can manage and have the financial ability to complete the purchase, honestly, ponder buying an off plan project to capitalize your investment.