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You should refinance if you have a variable rate, or if your fixed rate becomes variable in the next 3-6 months. Here is why.

In the UAE, the norm is that Banks offer mortgages that are fixed for 1 year, 2 years, 3 years or 5 years. Post the fixed period, all these mortgages become variable and follow a variable structure of “Bank Margin” + “1 or 3M EIBOR”.

The Bank margin usually goes from 0.5% to 3%, depending on the client profile e.g. resident, non-resident, salaried, self-employed etc. The EIBOR part follows the EIBOR index, which is either 1M EIBOR or 3M EIBOR depending on the bank and the offer taken. Both 1M and 3M EIBOR are indices set and tracked by the UAE Central Bank.

Post the fixed period, all mortgages become variable and change on a monthly or quarterly basis based on the new value of the 1M or 3M EIBOR.

In an environment where rates are increasing, it is highly likely that mortgage holders end up paying more than their initial fixed monthly payments. In the finance jargon, we say that holders become “exposed” to variations in the mortgage rates, which are usually set by the banks.

This implies that in case of high swings, or increasing rates environment, it is highly likely that your mortgage payments will increase drastically over the next few months or years.

In the case of a 1M AED mortgage, that means paying 40,000 AED more on a yearly basis, than the initial fixed payout.

In the current environment where we operate (2023-25), it is assumed that rates will continue increasing, driven by inflation, which implies that your monthly payouts are also expected to continue increasing, if not refinanced with a fixed mortgage.

For more details about refinancing your mortgage

Can I get a mortgage in Dubai and the UAE as non-resident?

Yes, non-resident and international investors willing to acquire a property in Dubai can avail a mortgage in the UAE.

HomePlus proposes various offers to investors to acquire a property, and has helped hundreds of non-resident property buyers over the last years.

To learn more about the criteria to get a mortgage as a non-resident

What is the difference between a flat rate and a reducing rate of interest for a mortgage?

Flat rate and reducing rate of interest are two methods used to calculate the interest on a mortgage. A flat rate of interest remains the same throughout the loan term and is calculated based on the original amount borrowed or principal, while a reducing rate of interest takes into account the repayments made by the borrower and is calculated based on the outstanding balance.

In some cases, a flat rate may be advertised at a lower rate than a reducing rate. It is crucial to confirm with the bank or mortgage broker which rate has been applied when obtaining a mortgage.

In the UAE, all the banks use a reducing rate of interest for mortgages, however for other loans, like car loans, some banks might be using flat rates.

To speak to an advisor and fully understand the difference

How can I calculate my mortgage affordability?

To calculate mortgage affordability, keep in mind that different banks may have slightly different methods, but a general guideline is to use 50% of your monthly income.

From this amount, they will subtract any other credit commitments you have, such as car loans, personal loans, and approximately 5% of your credit card limits. This will determine your maximum affordability.

Next, a stress test will be conducted using a stress rate of interest, which can range from 3.5% to 8%, depending on the bank. The purpose of this test is to ensure that you will still be able to afford your mortgage repayments in case the interest rates increase to the stress level.

To learn more about how much you can afford, use our affordability calculator here.

Is it possible to finance commercial properties as private individuals?

Individuals can finance commercial properties in the UAE through a commercial mortgage. However, obtaining a commercial mortgage as an individual can be more difficult compared to a business, as the lender will typically assess the individual’s creditworthiness and financial capacity to repay the loan, as well as the income-generating potential of the property.

What is the difference between leasehold and freehold property in the UAE?

When you buy a property in freehold, you own both the land and the property itself, whether you pay in full with cash or utilize a mortgage. On the other hand, when you buy a property in leasehold, you are only purchasing the rights to the property for a limited time, usually around 99 years.

In Dubai and the UAE, leasehold property is not very common. However, there are some areas where you can buy leasehold property, such as the Green Community and Silicon Oasis.

Can I finance a plot and construction through a mortgage in the UAE?

Yes, you can use a mortgage to buy a plot and finance your property construction.

For more information, schedule a free advisory call with one of our plot financing experts here.

For more details about financing plots and off-plan properties, click here.

What are the associated costs of buying a property in the UAE?

When purchasing a property in the UAE, there are several costs that you should be aware of, although they may vary slightly depending on the emirate where you are buying. In addition to the downpayment, the following fees are typically required:

Land Department Fee	4% of the purchase price (+ VAT) plus AED 580 (In Abu Dhabi 1%-2%)
Agent Fee	2% of the purchase price (+ VAT)
Mortgage Registration Fee	0.25% of the mortgage borrowed (+ VAT) plus AED 290
Bank Arrangement Fee	0 to 1% of loan amount (+ VAT)
Trustee Fee	AED 4,000 (+ VAT)
Valuation Fee	AED 2,500 – AED 3,000 (+ VAT)

Some of these fees can be incorporated into the mortgage, and you can learn more about this option

The contract F and the MOU should also state the associated costs.

What is a title deed in the UAE?

A title deed is a legal document that confirms ownership of a piece of land or of a property and is registered with the Land Department.

In Dubai, title deeds are generated by the Dubai Land Department (DLD)

If you have purchased a property using a mortgage, your name will be included on the deed as the owner. However, the original title deed is held by the bank as collateral until the mortgage is fully paid off.

What is a contract F, the property buying MOU in Dubai?

An MOU, or Memorandum of Understanding, is a key component of the property purchasing process.

It is a document drafted by the real estate agent that outlines the terms and conditions of the property purchase agreement, including timelines and other important details.

The contract F, is the official MoU as defined by the Dubai Land Department.

Before you sign the MOU, you need to make sure it is reviewed by an independent professional (not your agent) on your behalf to ensure that everything is in order.

If you have any questions on your MOU, one of our experts can help you read through it

What is a Developer NOC?

A NOC, short for No Objection Certificate, is a legal document that confirms that the organization or individual issuing it has no objections to the points outlined in the document.

In the UAE, when buying a property, it is typically necessary to obtain a NOC from the developer to ensure that the property has clear title and that all service charges and utilities have been paid.

This document serves as evidence that the developer has no objections to the property being sold to another individual. If you have any questions on your NOC, one of our experts can help you read through it. Schedule you free advisory call here.

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