How to Use Mortgage as a Tool for Ready Secondary Property Investments?

Using a mortgage to finance your ready secondary property investment in Dubai can be a powerful tool. It allows you to leverage your financial capacity and purchase a property with less upfront capital. When combined with payment plans, it becomes an even more flexible option for investors. Here’s how you can effectively use a mortgage as part of your investment strategy.

1. Understand Your Mortgage Financing Options

Dubai’s banks offer mortgage loans for expatriates up to 75%-80% of the property value, with UAE nationals often eligible for up to 85%. The key is to understand the terms and conditions of the mortgage and how it fits into your overall financial plan. Mortgage options typically come with fixed rates or floating rates, each with its advantages depending on your preferences.

• Fixed Rate: Predictable payments for the entire loan term.
• Floating Rate: Payments may vary depending on market conditions.

2. Combining Mortgage with Payment Plans

Most ready secondary properties with payment plans require investors to pay a small upfront payment, often between 10-20% of the property value. The remaining balance can be paid in installments over the term of the payment plan, which could range from 5 to 10 years. By securing a mortgage for a portion of the property price, you can significantly reduce the upfront payment burden.

For example, if you’re purchasing a property worth AED 1 million, the bank could finance 80%, leaving you with an AED 200,000 deposit. If the seller offers a payment plan for the remaining balance, you can structure your

payments to align with the mortgage term.

3. Calculate Your Monthly Mortgage Payments

Before committing to a mortgage, calculate your monthly mortgage payment based on the loan amount, interest rate, and term. Ensure that the total monthly payment, including the payment plan installments, fits comfortably within your budget. Keep in mind that property maintenance costs and potential vacancy periods should also be considered.

4. Leverage Rental Income for Repayments

One of the primary benefits of purchasing secondary property is the ability to generate rental income. If the property is located in a high-demand area, the rent you receive can cover a substantial portion of your monthly mortgage payments. Ideally, your mortgage payments should be aligned with your rental income, ensuring a neutral or positive cash flow situation.

Conclusion: Smart Financing for Higher Returns

Using a mortgage in combination with a payment plan is a strategic way to leverage your financial position and maximize your potential returns from ready secondary property investments. Ensure that you assess all costs carefully and choose a mortgage option that fits your financial goals.

Quote to Remember: "Real estate is the only investment that can give you rental income while you sleep." — Unknown

About the Author:

Shahzad Ahmed, Senior Consultant at Harbor Real Estate, Dubai, is a finance-savvy real estate expert specializing in investment strategies that combine mortgages and payment plans for maximum returns. His practical approach has helped countless clients build wealth in Dubai's competitive real estate market.

For expert mortgage advice and investment consultation, contact Shahzad at:

• Email: [email protected]
• Mobile: +971-54-3979729
• WhatsApp: +971-54-3979729