Finding the right path for your investment
Dubai is becoming one of the most popular cities for real estate investors, with more and more French people interested in acquiring property. When making an investment, it’s important to consider the various financing options available.
Real estate bank loan :
Bank loans are the most common form of financing. It enables buyers to borrow to make their investment with a down payment. You need to look hard to find the best conditions, as different banks have different rates and repayment terms. It remains very difficult for non-residents to access financing from local Emirati banks.
The advantage of this type of financing is that the financing period is longer, the loan amount can be higher, which is perfect for investors who wish to acquire a property, and when the interest rate is low, it allows the investor to reduce the cost.
And the downside is that the financing process takes longer, as the markdown is longer and requires a lot of documentation. The bank may require additional documentation, and the interest rate may vary and increase.
Off-plan purchase and construction financing:
People with funds and liquidity more often resort to off-plan investments. This is ideal for investors looking to take advantage of Dubai’s ever-growing real estate market.
The positive points of this type of investment are that the administrative process is shorter and simpler, and investors can choose the pace of their financing plans.
The downsides are that you need to have the necessary liquidity, and there’s a schedule of deadlines to meet.
There are two types of payment plans:
- Post-transfer payment plan: allows you to repay part of the property price after completion or handover of the keys within a specified period.
- Cash-on-delivery plan: allows you to repay part of the property price before completion and delivery.
Developer financing :
This option allows investors or individuals to pay monthly installments directly to the developers. If payments are not made on time, there is a possibility of losing the property.
On the plus side, the administrative burden associated with this type of financing is low, and it is often less expensive than conventional financing.
On the negative side, the cost of ownership is higher than the value of a similar home on the market.
Financing a property purchase in Dubai with personal loans:
Banks outside the UAE will not finance property purchases in this country, so there are other options such as personal loans that may be a solution. The conditions for obtaining a personal loan can vary considerably depending on the country and the bank.
The good thing is that it’s immediately liquid, so it can be used to cover a significant part of the real estate investment, or to provide additional funds for a larger investment. What’s more, interest rates are generally lower.
The negative points are that the repayment period is shorter, it’s a personal bank guarantee, and your income or expenses may change.
Foreign bank financing :
There are various financing options for customers with financial assets. These often include life insurance or an existing property, which can be used as collateral for the mortgage. Overseas bank financing is for investors with sufficient funds to secure the mortgage and a good credit history. It’s important to consider the risks involved.
The positive points of bank financing abroad are first and foremost their experience in managing, financial and legal differences between countries, and the more advantageous interest rate and more flexible repayment option
On the negative side, obtaining a mortgage from a bank abroad is reserved for customers who have a good relationship with the bank and a good track record. What’s more, differences between countries, monetary policies and legislation make it complicated.
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