How Mortgages Work in UAE
LTV ratios, fixed vs variable rates, and what expats need to know about home loans.
UAE Mortgage Basics
UAE mortgages (home loans) are regulated by the Central Bank of UAE. Key rules:
Loan-to-Value (LTV) Limits:
- •UAE Nationals: Up to 85% LTV (15% down payment)
- •Expats: Up to 80% LTV (20% down payment)
- •Properties above AED 5M: Up to 70% LTV
- •Off-plan properties: Up to 50% LTV
Maximum Loan Tenure: 25 years
Maximum Debt-to-Income Ratio: 50% of monthly income
Fixed vs Variable Rates
Fixed rate (1–5 years): Rate locked in. Typical 2025 rates: 4.5–5.5% p.a. Predictable monthly payments. Prepayment penalties apply.
Variable rate: Linked to EIBOR + bank margin. Currently: 4.8–6.0% p.a. Payments change as EIBOR moves. Can be cheaper or expensive depending on rate direction.
Most common structure: 3-year fixed, then converts to variable.
True Cost of a Mortgage in UAE
On a AED 1,500,000 mortgage at 5% over 25 years:
- •Monthly payment: ~AED 8,770
- •Total interest paid: ~AED 1,131,000
- •Total repayment: ~AED 2,631,000
Expat-Specific Considerations
1. Most banks want 2+ years of UAE employment history before lending to expats
2. Relationship pricing — being an existing bank customer can reduce your rate by 0.25–0.5%
3. Life insurance is mandatory for the loan amount — typically AED 500–2,000/year
4. Property insurance (building cover) is also required
5. If you leave UAE, the mortgage stays — you can continue paying, refinance, sell, or rent it out