A small booking payment can make a large purchase feel manageable. The important question is what happens after that first payment.
In last week's Beyond the Deal, I looked at the difference between an attractive waterfront view and a sound investment. This week, I want to apply the same discipline to payment plans. A good plan can help you organise your cash. It does not, by itself, establish that the home is good value.
Turn the percentages into money
Consider an illustrative AED 2 million home with a 20/40/40 schedule: 20% at booking, 40% during construction and 40% at handover. This is a worked example, not an offer from a particular developer.
The amounts are AED 400,000, AED 800,000 and AED 800,000. They still add up to AED 2 million, before transaction costs and the expense of getting the home ready to use.
The construction portion could be divided into several instalments. Their dates matter. Two plans described as 20/40/40 can create quite different cash demands if one collects the middle payments quickly and the other spreads them over a longer period.
Put every amount beside its due date. Then add a separate column showing where that money will come from. Savings, income and proposed borrowing should not be treated as interchangeable sources of certainty.
Work backwards from handover
The final AED 800,000 in this example deserves attention before the reservation, not shortly before the keys arrive.
If the plan depends on a mortgage, establish what a lender would need to approve the buyer and the property. An indicative discussion today is not a completed lending decision at handover. If the plan depends on selling another asset, consider what happens if that sale takes longer or achieves a lower price.
I would also test the purchase without an early resale. Can you meet the instalments and keep the home if finding the next buyer takes longer than expected? A purchase that requires someone else to rescue the payment schedule is a different proposition from one you can comfortably hold.
Keep the other costs visible
The purchase price is only one line in the cash budget.
For a completed-property sale in Dubai, DLD's current registration service lists a 2% buyer share and a 2% seller share, with additional applicable charges. Check the actual transaction and agreed payer allocation. Do not copy that completed-sale schedule into every off-plan purchase without checking its registration route and contract.
Add the relevant registration and transaction charges, any agreed agency fee, financing expenses, currency conversion, furnishing and an ownership reserve. Give each a payment date rather than putting them into an undated total at the bottom of the page.
After completion, the operating budget matters too. For a completed Dubai building, Mollak's service-charge index provides RERA-approved community rates. For a proposed building, a sales estimate is not the same evidence as an approved operating charge.
If rent is part of the plan, allow for the time between handover and the first occupied tenancy. Keys, furnishing and a tenant do not necessarily arrive together.
Compare the home, then the payment plan
A convenient schedule can be worth something to a buyer. To judge that benefit, first compare the underlying homes: usable space, layout, location, delivery stage, specification and the alternatives available within the same total budget.
Then compare the dated cash schedules. A lower initial payment does not automatically offset a higher purchase price, and a completed home ready for use offers something an unfinished home cannot yet provide. Equally, a future home may suit a buyer who does not need to move or receive rent immediately.
The right answer depends on the purpose of the purchase. The payment plan should support that purpose, not replace it.
One sheet before one signature
Before reserving, I would want a single page showing the home and price, every instalment and date, other buying costs, the proposed source of each payment, and the cash left for the first year of ownership.
Below it, write what changes if delivery is later, borrowing is lower or resale takes longer. Those are planning questions, not predictions.
If that page works, the payment plan is doing its job. If it only works after an assumed price increase, the percentages have distracted you from the investment.
— Raj Tomar
Continue with the IWR first-time buyer guide or last week's Beyond the Deal.