Are you wondering how to buy zero down payment property in Dubai due to lack of capital?
Well, to answer this question, you may have to dig deep into this blog to find out how to buy property in Dubai without a down payment.
But first, let’s get to know what a down payment actually does.
What is a Down Payment?
A Down payment plays a significant role in buying any property in Dubai. It is an upfront payment that is made by the buyer at the time of property purchasing.
The down payment basically protects the bank if the borrower suddenly stops making payments. In the booming economy of Dubai, investing or buying a property is a clever choice but to buy an apartment in Dubai without a down payment makes the process all the more profitable. Now that we have gotten the concept of a down payment out of the way let’s learn how to buy property in Dubai without a down payment.
How to Buy Property in Dubai Without Down Payment?
A down payment is a prerequisite for buying any property in Dubai, as it solidifies a buyer’s commitment to the buying process and reduces the lender’s finances. To buy an apartment in Dubai without a down payment is almost impossible.
Especially for new buyers, any property that is valued at less than AED 5 million requires a Loan to Value of 75% for expats in the UAE. In comparison, the Loan to Value ratio decreases to 65% for properties that cost over AED 5 million and to 60% for all the later transactions.
These numbers just display how the market can be quite costly for someone who is just dipping their toe in the water.
Bearing this in mind, there are certainly alternatives for buying a property without a down payment, and here we are listing them below:
6 Ways to Buy Property in Dubai Without Down Payment
1. Use your Non-cash Assets
If you are new to the investment market, you may shy away from putting down a particular sum of your capital as a down payment. Here, you can propose your non-cash assets to the developers or sellers instead of a down payment.
Your non-cash assets can be used in exchange for a minimized financial down payment to buy an apartment in Dubai without a down payment. Non-cash assets may or may not include services, products, properties in different locations, etc.
2. Get a Personal Loan
Getting a personal loan will help you use it to buy property in Dubai without a down payment. They differ from Home Loans (mortgages) as they are not specific to a particular cause and instead can be used as a down payment.
In Dubai, getting a personal loan will help you a lot as they usually have a lower borrowing limit compared to other loans. They also need to be paid back within a maximum of 4 years and have more flexibility depending on the bank.
3. Exchange of Properties
As mentioned before, you may consider exchanging properties instead of a down payment. If you already own a property and are looking to buy a house in Dubai without a down payment, you can also barter properties.
With the way the economy of Dubai is flourishing, it is not surprising that you may want to think of buying property here. A property exchange may enable you to get your property of dreams in the vibrant city.
4. Evaluate Lease-to-Own Options
If you want to get away with a 0 down payment property in Dubai, you can look for lease-to-own options. These options allow you to use rent payments to build equity in the property.
Lease-to-own options work well for new property buyers in Dubai as they give them enough freedom to buy a house in Dubai without a down payment, with ease, and without much financial strain.
5. Negotiate a Lower Down Payment
You can try to negotiate the down payment with the seller or developer to lower it. But it depends upon them to actually go through with it. Some developers and sellers may be a bit flexible when you are seeking to buy property in Dubai without a down payment.
With that being said, completely eliminating a down payment when you are buying a property in Dubai is simply not an option.
6. Search for Developer Payment Plans
For a 0 down payment property in Dubai, you can look for some developer payment plans that have extended post-handover options available. This will allow you to pay down payments in installments over a period of time, even after the completion of the property, in some cases.
This is an ideal option for new investors, especially as they do not possess excessive cash flow and cannot afford to make down payments upfront. It will do you more good if you reach out to a professional real estate agency in Dubai that can aid you in making smart real estate choices.
Types of Available Properties in Dubai
When it comes to the thriving economy of Dubai, we see a plethora of property options available. With every type of property, the down payment cost also varies. For example, the cost of a studio apartment in Dubai can start with AED 220,000 on average.
On the other hand, a two-bedroom apartment in Dubai Marina can cost AED 2,450,000, and a three-bedroom villa can cost AED 3,850,000.
Note: For more information on Dubai’s thriving real estate sector and reasons to invest in it, read our blog on 9 reasons to invest in Dubai’s real estate market.
Final Word
Owning a property in Dubai can be your reality, even if you lack the necessary funds to make a down payment. The above-outlined options can really help you buy property in Dubai without a down payment. Still, our recommendation would be to connect with an expert real estate company in Dubai and get your hands on the exclusive properties that can help you earn high rental yields or guarantee a better return on your investment.
FAQs
Q1. Are there any specific banks in Dubai that offer zero down payment mortgages?
There are not many options of banks available that offer zero down payment mortgages. However some developers collaborate with banks to provide alternative options to buy property in Dubai without a down payment.
Q2. Can I use personal loans to cover the down payment?
Yes. You can use personal loans to cover your down payment but be advised that these loans can have fluctuating interest rates.
Q3. Should I reach out to a real estate company in Dubai when buying zero down payment property in Dubai?
Certainly, when you are looking to buy a house in Dubai without a down payment, it would be best if you partner with a real estate agency in Dubai, as they will provide you with the latest market insights and will help you make an informed decision.
Q4. When should I look to buy property in Dubai without a down payment?
Assess and evaluate your finances to figure out where you stand currently or if you can manage to buy a property in the current market or not. Additionally, ensure that you seek advice from a skilled real estate company in Dubai that can help you make the right decision.
Q5. What are the potential risks of buying a property without a down payment in Dubai?
When you buy a property in Dubai without a down payment, you are exposed to some potential risks, such as a longer loan term, high monthly payments, and higher interest rates, etc.
