Understanding Mortgage Rate Types in UAE
When taking out a mortgage in the UAE, you'll typically choose between a fixed rate for an initial period (usually 1–5 years) and then move to a variable rate tied to EIBOR (Emirates Interbank Offered Rate).
Fixed Rate Mortgages
A fixed rate mortgage locks in your interest rate for an agreed period. This offers:
- Predictable monthly payments — great for budgeting
- Protection against interest rate rises
- Typically slightly higher initial rate vs variable
Variable Rate Mortgages (EIBOR-linked)
After the fixed period ends, most UAE mortgages switch to a variable rate calculated as EIBOR + bank margin. For example: 3-month EIBOR (currently ~5.2%) + 1.5% bank margin = 6.7% total.
- Can be lower when EIBOR is low
- Payments fluctuate with market rates
- Usually lower margin over the long term if rates fall
Which Should You Choose?
Our recommendation depends on your situation:
If you plan to sell within 3–5 years, or want payment certainty, choose a fixed rate. If you're comfortable with some fluctuation and believe rates will fall, variable can work in your favour.
