Buying a home is one of the biggest financial decisions anyone makes. Traditionally, purchasing property requires a sizable down payment followed by large monthly installments—something that can feel overwhelming for many buyers. In response, developers around the world have introduced more flexible payment structures to attract modern homeowners and investors. One of the most popular among these new options is the 1% Payment Plan.
This guide explains everything you need to know about the 1% Payment Plan: how it works, who it’s for, its advantages and drawbacks, and how to decide whether it’s the right choice for your property goals.
What is a 1% Payment Plan?
A 1% Payment Plan is a real estate payment structure where buyers pay 1% of the property price each month, often after paying an initial down payment. This method allows buyers to spread payments over a longer period while keeping monthly obligations low and predictable.
In many cases, the 1% is calculated based on the total property value, not the remaining balance. Developers use this plan to make properties seem more affordable upfront, enabling buyers to secure units without the pressure of a large monthly burden.
In simple terms:
- You pay 1% of the price each month.
- Payments continue until you reach the agreed-upon percentage before handover (often 40%, 50%, or 60%).
- After handover, you pay the remaining balance—either through a mortgage or a post-handover payment plan.
The concept is designed to make property ownership accessible to a wider group of buyers, especially first-time homeowners, young professionals, and investors looking for easy entry into the market.
How Does a 1% Payment Plan Work?
Although exact structures vary among developers, most 1% plans follow a similar pattern with these components:
Reservation or Booking Fee
To secure a unit, buyers usually pay a reservation fee—typically between 1% and 5% of the property value. This fee locks the price, the unit type, and the payment schedule.
Down Payment
After the reservation fee, buyers might be required to pay a 10%–20% down payment within a set period. Some developers skip traditional down payments altogether and instead roll everything into the monthly 1% plan.
1% Monthly Installments
The core feature of the plan is the 1% monthly payment, which continues until the buyer reaches the required percentage before handover. The duration varies by project. Typically:
- For a $400,000 apartment
- 1% per month = $4,000
- If the pre-handover requirement is 50%
- $200,000 would be paid over 50 months (~4 years)
Handover Payments or Mortgage
Once the property is ready, buyers choose one of two routes:
- Pay the remaining amount in a lump sum
- Finance the balance through a mortgage
In some developments, a post-handover payment plan is offered, allowing buyers to continue paying monthly installments for several years after moving in.
Post-Handover Options
Common post-handover terms include:
- 40% before handover, 60% after
- 50/50 plans
- 60/40 plans
- 1% per month even after handover
These give flexibility for buyers who cannot secure a mortgage immediately.
Why Do Developers Offer 1% Payment Plans?
The 1% Payment Plan structure is primarily a marketing and cash-flow strategy. Developers gain several benefits:
Increase Sales Volume
Lowering the barrier to entry attracts a wider pool of buyers, especially those who cannot afford traditional down payments.
Compete in Saturated Real Estate Markets
In cities with a lot of supply (e.g., Dubai, Abu Dhabi, Riyadh, Istanbul), developers use competitive payment terms to stand out.
Maintain Construction Funding
The steady monthly inflow helps developers maintain project cash flow without relying too heavily on external financing.
Appeal to Global Buyers
Foreign investors are often more comfortable committing when monthly payments are predictable and low.
From the developer’s perspective, the plan is a win–win: it boosts sales while maintaining financial stability.
Benefits of a 1% Payment Plan for Buyers
A 1% Payment Plan offers several compelling advantages that have contributed to its popularity.
Lower Monthly Commitment
The most obvious benefit is the small monthly payment, often lower than rent in major cities. For buyers, this makes owning property feel more achievable.
Easy Entry into the Market
The plan reduces upfront costs, enabling people to buy earlier in life or during market booms.
Higher Affordability Without a Mortgage
Many buyers dislike dealing with banks early in the process. A 1% Payment Plan lets them:
- Avoid early loan approvals
- Build payment history
- Improve financial stability before getting a mortgage
Flexible Payment Timeline
Because buyers pay incrementally, they have more time to arrange financing or prepare for future payments.
Suitable for Investors
Investors use 1% Payment Plans strategically:
- Buy early during presales
- Sell later at a profit after paying only a small portion
- Rent out upon completion with minimal cash outlay
The low monthly commitment makes the investment less risky.
Protects Buyers Against Inflation
If property values rise during construction, early buyers effectively “lock in” a lower price while paying slow, steady installments.
Good for Buyers with Irregular Income
Freelancers, business owners, and expatriates often struggle to qualify for traditional mortgages. A developer-backed payment plan bypasses those challenges.
Potential Downsides and Risks of a 1% Payment Plan
While the plan has many benefits, buyers should also understand the risks and limitations.
Higher Overall Price
Developers may slightly increase property prices to compensate for the long payment structure. Buyers should compare:
- Cash price
- Mortgage price
- 1% payment plan price
Limited Mortgage Options at Handover
Once construction is complete, some buyers struggle to secure a mortgage—especially if:
- Their salary is inconsistent
- Their credit score is low
- Banking requirements change
If they cannot secure financing, they may risk losing the unit if no post-handover plan is available.
Pressure of Balloon Payments
Most 1% Payment Plans require a large balloon payment at handover. For example:
If buyer has paid 50%
Remaining 50% is due immediately
This can be difficult without bank financing.
Risk of Project Delays
If the project is delayed, buyers may:
- Pay 1% longer than expected
- Face delays in moving in
- Need to adjust financial plans
Not Ideal for Buyers Who Prefer Quick Ownership
Some buyers want to move into their home immediately. 1% Payment Plans are often tied to off-plan (under-construction) properties, meaning handover can be years away.
Potential Limitations on Re-Selling
Depending on the developer, resale might not be allowed until a certain percentage of the property is paid off—usually 30–40%.
Who Should Consider a 1% Payment Plan?
The plan is ideal for certain types of buyers:
First-Time Homebuyers
Young professionals or new families who cannot afford high down payments can benefit greatly.
Long-Term Investors
Investors looking to buy early, hold during construction, and sell later find the low initial cash requirement appealing.
Buyers Without Immediate Bank Approval
Foreign buyers, freelancers, or those with limited credit history can benefit from a plan that doesn’t require immediate mortgage approval.
Expat Residents Planning to Stay Long-Term
Expats planning to live in the country for many years may prefer investing gradually rather than paying rent.
Buyers Who Expect Rising Future Income
Those who anticipate higher income in the future might prefer low early payments and handle larger future installments more comfortably.
Who Should NOT Use a 1% Payment Plan?
The plan is less suitable for those who:
- Prefer to own immediately
- Have stable income and can get a mortgage easily
- Want the lowest total cost without hidden premiums
- Cannot manage large balloon payments at handover
- Want to minimize long-term financial obligations
For these buyers, a traditional mortgage or full cash purchase may be more economical.
Types of 1% Payment Plans
Although the system may sound simple, there are several variations.
Pure 1% Pre-Handover Plans
Buyers pay 1% monthly until a certain percentage is reached, then pay the remainder at handover.
1% With Post-Handover Payment Plans
The buyer continues paying 1% each month even after moving in. This is ideal for buyers who prefer spreading costs over longer periods.
1% Mixed with Milestone Payments
Some developers mix small monthly payments with larger milestone-based installments, such as:
- 10% on booking
- 10% on foundation completion
- 1% monthly thereafter
1% Rental-Backed Plans
In rare cases, developers allow the property’s rental income to contribute to the 1% payments—ideal for investors.
Key Things to Check Before Choosing a 1% Plan
Developer Reputation
Always research:
- Past project delivery times
- Customer reviews
- Financial stability
Exact Payment Schedule
Some advertisements simplify the plan to attract buyers; always request a detailed breakdown.
Handover Requirements
Understand exactly how much is due at completion.
Mortgage Eligibility
Check whether banks in your country finance off-plan properties under these schemes.
Total Cost Comparison
Sometimes the plan increases the total cost by 3–8%. Compare with:
- Mortgage cost
- Cash discount
- Other developers
Penalties for Late Payments
Missing installments may result in:
- Penalty fees
- Freezing of the plan
- Loss of the unit
Resale Restrictions
Some developers limit resale until a certain percentage is paid.
Is a 1% Payment Plan Safe?
Yes—if it’s offered by a reputable, licensed developer with proper government oversight. Most countries with booming off-plan markets (such as the UAE, Turkey, and Saudi Arabia) have strict regulations:
- Escrow accounts
- Construction-linked payments
- Government approvals
Buyers should still do due diligence individually.
Advantages of 1% Plans for Investors
Investors often use 1% plans strategically to maximize returns.
Low Investment, High Appreciation
Since off-plan prices typically rise as construction advances, investors can profit after paying only a small portion of the property value.
Exit Before Completion
Some markets allow reselling before handover once you’ve paid 20–40%.
Better Cash Flow Management
Investors can buy multiple properties using staggered 1% plans instead of locking capital into one property.
Ideal for Short-Term Flips
Buying early and selling after 1–2 years can generate good returns with limited risk.
Closing Lines
A 1% Payment Plan can be an excellent opportunity for buyers seeking flexibility, low commitment, and easy entry into the real estate market. It offers predictable monthly payments, requires smaller upfront capital, and works particularly well for first-time buyers, investors, and expats.
However, it is not perfect for everyone. Buyers must consider long-term affordability, mortgage readiness, developer reputation, and the risk of large handover payments.
If used wisely and with proper due diligence, a 1% plan can be one of the most affordable and accessible ways to step into property ownership or investment—especially in markets where real estate prices are rising.
Frequently Asked Questions (FAQs)
Is 1% really 1% of the total value?
Yes. It is almost always 1% of the total property price, not the remaining balance.
Does 1% include service charges?
No. Service charges are separate and apply after handover.
Can I rent out the property before fully paying?
Usually yes—once you receive the keys. Post-handover plans allow this.
Can I cancel the plan?
Cancellation fees depend on the contract. Usually, the developer keeps the paid amount or deducts a penalty.
Are 1% plans interest-free?
Most are interest-free but may come with higher base prices.
Related Blog: Dubai Real Estate Payment Plans
What do you think?
It is nice to know your opinion. Leave a comment.