Dubai is a city of dreams, where you can enjoy a luxurious lifestyle, a vibrant culture, and a booming economy. But owning a property in Dubai can be challenging, especially if you don’t have enough savings or a high income. That’s why some developers have come up with an innovative solution: the 1% payment plan.
The 1% payment plan is a scheme that allows you to buy a property in Dubai by paying only 1% of the total price every month. This means you can own a property with a low down payment, a flexible payment period, and no interest. Sounds too good to be true, right? Well, in this blog post, we will explain everything you need to know about the 1% payment plan, how it works, what are the benefits and drawbacks, and who is the man behind this idea.
What is the 1% payment plan?
The 1% payment plan is a monthly plan that lets you own a property by paying only 1% of the total price every month. For example, if you buy a AED 1 million property, you pay AED 10,000 every month until you reach 100% which roughly amounts to eight years.
How to calculate the 1% payment plan?
The 1% payment plan is simple to calculate. Simply take the price of the property and multiply it by 1%. That will be the amount you will pay each month. For a better practice, it’s best if you include any additional costs you might incur such as maintenance and repairs. For instance, if you buy a property worth AED 500,000, you will pay AED 5,000 per month. The costs of transfer fees, commission and DLD registration costs are seperate to this and are typically paid when first buying the property from the developer.
What are the benefits of the 1% payment plan?
Affordable for the masses: The biggest benefit of the 1% payment plan is that it’s affordable. Unlike a mortgage, where you pay for upwards of 25 years and an average interest rate of 3-6% depending on the prevailing rate, the 1% payment plan has no interest and a shorter payment period – you are essentially getting an interest free loan from the developer. This means you can save a lot of money in the long run and own a property sooner and for less money.
Flexibility: The other benefit is the flexibility it offers. You can choose the property size, location, and design that suits your preferences. You can also adjust the payment plan according to your financial situation. For example, you can pay more than 1% if you have extra income or the 1% which is a very nominal amount. You can also sell the property at any time and get your money back however keep in mind that there is a minimum threshold that either you or the new buyer has to pay up to to transfer the property, this is usually 50% but varies from developer to developer.
Ownership: Lastly, the 1% payment plan is more secure as by the 50% of the payment period you’ll get your title deed. You can also enjoy the benefits of owning a property, such as rental income, capital appreciation and personal satisfaction.
What are the drawbacks of the 1% payment plan?
Limited choice: The 1% payment plan is not without its drawbacks. One of them is that it limits your options. The 1% payment plan was primarily started by Danube and expanded on to a few other developers. However, few developers offer the 1% payment plan, hence giving you limited choices. You may not find the property that meets your expectations or budget.
Subject to approval: The 1% payment plan is enticing but if you end up missing or delaying payments, the property could be repossessed by the developer so make sure you can pay the instalments on time.
Who came up with the 1% payment plan?
The 1% payment plan was started by Rizwan Sajan, the chairman and founder of The Danube Group – also known as the 1% man. During the property boom between 2004 and 2007, Rizwan noticed that the majority of expats were renters.
Because they were salaried and were living in the UAE for 4-5 years, they’d accumulated some savings, but not enough to purchase a property. Hence, they came up with a plan where a small down payment would be needed and a 1% monthly balance to be collected once the property was ready.
Hence, the 1% payment plan was born. This was an instant success, allowing people to own properties with very little capital. Rizwan Sajan became one of the most influential and successful businessmen in Dubai and his company Danube Group became one of the leading property developers in the region.
Summary
The 1% payment plan is a unique and innovative way to own a property in Dubai by paying only 1% of the total price every month. It offers many benefits, such as affordability, flexibility, and security. However, it also has some drawbacks, such as limited options and eligibility.