Banks Offer Off‑Plan Mortgages in the UAE — Will Buyers Care?

New mortgage deals for off‑plan homes — what changed and why it matters

The UAE property market has a new development: banks are teaming up with developers to offer mortgages on off‑plan homes. For buyers and investors watching housing prices and financing options, this sounds important, but our analysis suggests the practical effect may be limited. The primary reason: developer payment plans that charge no interest and spread payments through construction remain more appealing for many off‑plan purchasers.

Quick snapshot of the offers

• Lenders are proposing to finance up to 75% of a project’s cost in partnership with major developers such as Emaar, Modon, Dubai Holding and Sobha.
• The new schemes can stretch repayment timelines well beyond a typical construction period, bringing mortgage-style terms into the off‑plan market.
• Several partnerships were announced after the Iran war began, an event that has weighed on the UAE’s off‑plan sector.

Those are clear changes to how banks and developers present financing. But to understand who benefits and whether demand will shift, we need to look at how off‑plan purchases have worked in the UAE and who buys them.

Why developer payment plans still dominate

Traditional developer payment plans are the main reason analysts expect only a muted shift toward bank-originated off‑plan mortgages. The standard developer structure looks like this:

• Deposit: 10–20% to secure the unit.
• During construction: 50–75% paid in staged instalments over the build period.
• Final payment: balance on handover.

Two features make these plans hard to beat for many buyers: they commonly stretch over three to four years and they apply no interest to instalments. That combination is attractive when compared with a bank mortgage that would carry interest charges across a longer term.

As Sam Amidi, sales director at brokerage Mortgage Finder, told Dubai Eye radio, “We do get the enquiries, but we’re not expecting a major uplift in off‑plan, and the reason is that a lot of developers have attractive payment plans. Those plans probably make more sense than taking a mortgage at this stage.”

For buyers focused on short-term gains the calculus is straightforward: why pay interest when you can hold a virtually interest‑free payment schedule until completion?

Who buys off‑plan in the UAE — short‑term flippers vs long‑term owners

Understanding buyer motives is essential. Historically in Dubai there has been a strong cohort of short‑term investors who buy off‑plan with the aim of selling before completion, sometimes booking sizeable quick profits. Harry Martin, head of off‑plan at Betterhomes, noted that before the war many buyers would “come in, make some money and then leave.”

That contrasts with buyers who mortgage already-built homes. Those mortgage applicants tend to be end‑users who plan to keep the property longer and who therefore find longer-term financing logical.

Market data supports this distinction and signals how lending activity is shifting. According to Savills, refinancing accounted for approximately 70% of all valuation activity in Dubai by the end of the second quarter, compared with roughly 30% historically. In other words, today’s mortgage market is heavier on existing owners restructuring debt than on first-time end-user purchases of new stock.

Price differences: off‑plan comes with a premium

Banks and developers say their schemes are aimed at making homeownership more accessible. Abu Dhabi Islamic Bank’s group CEO Mohamed Abdelbary said he hopes the bank can “make homeownership more accessible” with its new mortgages.

Yet buyers should be aware of how prices compare. Data collated from the Dubai Land Department by DXB Interact shows that in the first half of the year:

• Off‑plan homes cost on average AED45,000 more than ready homes.
• Off‑plan units are smaller yet cost about 24% more per square foot than completed properties.

Higher per‑square‑foot pricing and smaller unit sizes mean the headline affordability of an off‑plan purchase can be weaker than it looks when buyers compare simple down‑payment figures. When you add interest over a multi‑decade mortgage, total cost of ownership for buyers who intend to hold long term can change materially.

Will these bank‑backed mortgages change demand? A balanced view

There are arguments on both sides. I see reasons banks and developers are motivated to offer these products, and reasons buyers may ignore them.

Why lenders and developers will push the product

• Banks want to expand mortgage volumes beyond the post‑construction asset class; offering off‑plan finance increases origination opportunities.
• Developers can advertise lower cash pressure for buyers and potentially reach buyers who require longer-term financing.
• From a policy and PR angle, lenders frame this as improving affordability and opening ownership to a broader pool.

Why uptake may remain limited

• Developer plans with 0% interest during construction still beat a mortgage for many short-horizon investors.
• Off‑plan buyers often plan to flip — extending financing to 25 years does not align with that strategy.
• The market has been influenced by geopolitical events and a shift toward refinancing, reducing the immediate pool of new‑buyer mortgage demand.

Our sense is that these bank‑developer tie‑ups will increase the range of financing choices for a minority of buyers — especially end‑users who plan to hold a property and want predictable mortgage payments — but they will not convert the majority of off‑plan purchasers away from developer instalments.

Practical implications for buyers and investors

If you are considering an off‑plan purchase in the UAE, here is how to think about the new mortgage options.

Key decision factors

• Time horizon: If you plan to flip before completion, a bank mortgage that runs for 20–25 years is likely overkill.