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Off-plan handover: three numbers to check before counting on a mortgage
Disclosure
Mortigo is a Dubai mortgage brokerage. This is general educational commentary, not a product recommendation, nor an assurance that a loan will be approved. No payment or referral arrangement is involved, in either direction.
Editor's note. FairSqft's Price Check compares a price with completed sales, and the Off-plan X-ray looks at a project before it is built. Neither tells you how much a bank will pay out at handover. We asked a mortgage broker to explain that step. We checked the rule and the figures below against the Central Bank of the UAE's rulebook.
A FairSqft Price Check can tell a buyer how similar completed homes have sold. Its methodology rightly separates ready and off-plan transactions. But an off-plan buyer approaching handover has a different question: how much money will the bank actually release when the developer asks for the final payment?
Three numbers that are not interchangeable
Start with three numbers: the unpaid developer balance, the property's valuation accepted by the bank, and the loan amount the bank is prepared to disburse. They are not interchangeable.
A hypothetical example
Consider a purely illustrative AED 2 million apartment bought on a 50/50 payment plan. The buyer has paid AED 1 million and owes another AED 1 million at handover. Suppose the bank's valuation is AED 1.8 million and, for this hypothetical case, financing is limited to 50% of that valuation. That would put the collateral-based maximum at AED 900,000. The buyer still needs AED 100,000 to cover the developer balance, before applicable fees and any further bank conditions.
| Amount | |
|---|---|
| Purchase price | AED 2,000,000 |
| Paid to the developer so far (50%) | AED 1,000,000 |
| Balance due at handover | AED 1,000,000 |
| Bank's valuation | AED 1,800,000 |
| Maximum loan at 50% of the valuation | AED 900,000 |
| Buyer's own funds still needed, before fees | AED 100,000 |
Why 50%
The Central Bank of the UAE's mortgage regulations cap lending on off-plan purchases at 50% loan-to-value, regardless of buyer category. Different ceilings apply to qualifying completed-property mortgages. But a projected handover date does not automatically make a particular unit eligible for completed-property financing: ask the bank which treatment applies at its intended drawdown, and what evidence of completion it requires.
Even where a higher ceiling applies, it is only a ceiling. Income, existing debts, accepted property security, valuation and lender policy may reduce the approved amount. A borrower pre-approval is not a promise to fund a particular unit or meet a developer's deadline.
Four questions to ask the bank in writing
Before counting on the mortgage, request written answers to four questions:
- What is the current loan amount and validity period?
- Does the bank accept this developer, project and ownership documentation?
- What valuation and construction or completion evidence are required?
- What exact amount can be disbursed, on which date, against the developer's outstanding balance?
The useful comparison is not just an off-plan price against completed sales. It is the amount due on the actual payment date against the finance a bank has agreed to release.
*By Kunal Sharma, Founder, Mortigo Mortgage Broker L.L.C. Mortigo is a Dubai mortgage brokerage. This is general educational commentary, not a product recommendation, nor an assurance that a loan will be approved. No payment or referral arrangement is involved, in either direction. Edited and fact-checked by FairSqft. How we check claims*