We know that buying an apartment or house is a great investment, whether as your own home or to rent out and earn extra income. However, the cost can be very high for some people and they may not have enough money to pay the full value of the property. 

But there is a solution! In Dubai, there are different financing options. Each option has its own characteristics, benefits and limitations, so it is important to evaluate which option best suits your needs and financial possibilities. 

For this reason, it is essential to know the types of financing to buy a property in Dubai on the market and make the dream of having your own home come true. Below, we will present each of them in detail, but first, let’s see what real estate financing is all about.

What is real estate financing?

Real estate financing allows people to purchase their own home or other types of high-value real estate. This way, the immediate impact on their income is less.

This involves taking a loan for the purchase of high-value goods. For this reason, banking institutions in Dubai offer different possibilities to their clients, to grant short- or long-term loans with different interest rates, thus requiring a series of requirements that guarantee the repayment of the loan.

In addition, the types of real estate financing vary according to multiple factors, such as the purpose of the loan and the type of rate. However, it should be noted that the most important thing is to have good advice before submitting a loan application.

4 types of real estate financing in Dubai 

Did you know that many people dream of owning their own property in Dubai? To achieve this, the market offers different solutions that adapt to the payment capacity and needs of each client. The important thing is to know them, so that the final decision is the best one. Below, we show you which ones they are:

1. Mortgage loan

A mortgage loan is the most common financing option for purchasing a home in Dubai. It is a long-term loan used to acquire a property, which must be repaid in monthly installments that can be obtained through banks, credit unions, and other financial institutions.

One of the main advantages of mortgage loans is that they allow you to buy a house without having to have all the money in cash. In addition, the payment terms are usually long, which allows you to spread the payment for the house over a longer period of time. 

However, there are also disadvantages, such as the fact that a down payment or initial fee is required and that the interest rate can be high, depending on the financial institution granting the credit.

2. Housing leasing 

Another financing option for buying a home is residential leasing. This consists of a lease with an option to buy, in which the tenant agrees to pay a monthly rent for a certain period, at the end of which he has the option to purchase the property for a previously established price.

The good thing about this type of financing is that the requirements for this type of financing are less demanding compared to mortgage loans, especially in terms of the initial amount required. Consequently, it becomes a more accessible option for those who do not have a large amount of capital to invest in a house.

On the other hand, from the buyer’s point of view, there are some associated disadvantages. The first thing to mention is that the final cost is higher than that of a mortgage loan and its interest rates are generally higher.

3. Real estate crowdfunding

This is a form of alternative financing, which is based on small contributions. That is, a person or company launches a project on the patronage pages and through them, those who are interested contribute with the amount they can.

However, projects usually have budget targets, which should be met by a deadline. If the target amount has been reached by that date, the sponsors must contribute the agreed amount.

If the target amount is not reached, the project will fail and the sponsors will not contribute the agreed amount. In other words, in real estate crowdfunding, a part of the property is purchased, usually with investment intentions.

4. Family Financing 

This involves asking a family member for help to provide you with the amount you need to buy a house. It is similar to applying for a loan, but instead of agreeing to a loan with a bank, you do it with a family member.

The best thing to do in these cases is to sign a contract with a payment deadline or a specific duration. This way, you avoid any of the parties defaulting, forcing both parties to fulfill their part of the deal. 

Conclusion 

Owning a home is a big step in life for anyone, but it can also be a big investment. Fortunately, there are different financing options in Dubai that allow people to purchase a property even if they don’t have all the cash on hand.

It is important to remember that buying a home involves a great financial responsibility, so it is essential to carefully evaluate these available options and choose the one that best suits your needs and financial possibilities. 

Now that you know the different financing options for buying a house, don’t forget that with careful planning and the right information, you will make your dream come true: having your own home!