Fixed and variable rates
A fixed rate is locked for a set period — commonly one to five years — giving predictable payments. After the fixed period the mortgage usually reverts to the lender's variable rate unless you refix.
A variable rate moves with the lender's benchmark — in the UAE, typically EIBOR (the Emirates Interbank Offered Rate) plus a margin. Variable rates can be lower initially but carry payment uncertainty.
Reducing versus flat — read the small print
UAE lenders may quote a flat rate or a reducing rate. A flat rate is applied to the original loan amount for the whole term, so a 4% flat rate costs significantly more than a 4% reducing rate. Converting flat to reducing is the fair comparison — roughly, a flat rate is equivalent to nearly double the reducing rate.
Always compare offers on a reducing-rate basis, and on the APR if provided.
What affects the rate you are offered
Rates vary by lender and by profile:
- Salary transfer relationships with the lender.
- Employment type — salaried applicants are usually offered sharper pricing than self-employed.
- Residency — non-resident mortgages typically carry higher rates.
- Loan size and LTV — larger deposits often unlock better pricing.
- Promotional periods — some rates are introductory and revert after a set term.
The rate is only part of the cost
Upfront fees (processing, valuation, registration) and early-settlement charges affect the real cost of a mortgage as much as the headline rate. When comparing lenders, look at the total cost over the period you expect to hold the mortgage.
A Funds Officer can compare indicative structures across the lenders that fit your profile.
This article is general information, not financial advice. Terms, criteria and lending limits vary by lender and are subject to individual assessment and change. A Funds Officer can review your specific circumstances.