The Central Bank of the UAE raised its Base Rate in September 2026, following the US Federal Reserve, and kept it unchanged in October. Higher interest rates increase the cost of a mortgage, but they do not affect buyers who pay in cash. How much a buyer can borrow depends on Central Bank limits and their income, while the monthly repayments depend on the interest rate.
How do interest rates affect mortgages in the UAE?
The UAE dirham is pegged to the US dollar. To maintain this peg, the Central Bank of the UAE generally follows changes in US monetary policy. On 16 September 2026, the US Federal Reserve raised its key interest rate by 0.25 percentage points. The Central Bank of the UAE made the same increase, raising its Base Rate from 3.65% to 3.9%, effective from 17 September. In their latest rate decisions, announced on 28 October, both central banks kept interest rates unchanged.
The effect on a mortgage depends on the type of interest rate in the loan agreement:
- Fixed-rate mortgages keep the agreed interest rate for a set period. Depending on the bank and offer, this can be one, two, three or five years.
- Variable-rate mortgages change in line with a reference rate. In the UAE, many banks use EIBOR and add their own margin to calculate the mortgage rate.
EIBOR (Emirates Interbank Offered Rate) is a benchmark interest rate used by UAE banks for lending and mortgage calculations. The EIBOR rate for a period of three months was 4.34% on 30 October 2026. Banks add their own margin to this rate when calculating mortgage interest. For example, if a bank adds a margin of 1.5 percentage points, the mortgage rate would be 5.84%. Changes in EIBOR can also affect the interest rate and monthly repayments.
How much can you borrow to buy property in the UAE?
When buying a property with a mortgage, you can borrow only a certain percentage of its price. This is known as the loan-to-value ratio (LTV). The maximum percentage varies based on the property price, the buyer’s residency status and property ownership, as well as the property’s completion status. For expatriate buyers, the maximum financing limits are:
| Property purchase | Maximum bank financing | Minimum down payment |
|---|---|---|
| First property priced at up to AED 5 million | 80% | 20% |
| First property priced above AED 5 million | 70% | 30% |
| Second property or investment property | 60% | 40% |
| Off-plan property | 50% | 50% |
These are regulatory maximums, not guaranteed loan amounts. A bank can offer less financing after reviewing the buyer’s income, existing debts, employment and ability to repay the mortgage. Banks must also check whether borrowers could still afford their repayments if interest rates increased. The Central Bank requires lenders to test affordability at an interest rate that is 2–4 percentage points higher than the rate offered. The Central Bank also limits a borrower’s total monthly debt repayments to 50% of their income.
The maximum mortgage term is 25 years. The bank will also consider the borrower’s age and other eligibility requirements when deciding how long the loan can run.
How much are monthly mortgage repayments in the UAE?
Mortgage rates vary between banks and depend on the buyer’s circumstances. Some banks offer a lower rate if the customer transfers their salary to the bank or meets other conditions.
For example, First Abu Dhabi Bank (FAB) offers fixed rates of 3.99% to customers who transfer their salary to the bank and meet the relevant conditions, compared with 4.24% for those who do not. These rates apply for fixed periods of one, two or three years. For a fixed period of five years, the rates are 4.19% and 4.44%, respectively. Once the fixed period ends, the mortgage switches to a variable rate. For eligible customers who transfer their salary to FAB, this rate is calculated using EIBOR for a period of three months, plus a bank margin of 1.5%.
| Interest rate | Based on | Monthly repayment |
|---|---|---|
| 3.99% | FAB fixed rate with salary transfer | AED 8,437 |
| 4.24% | FAB fixed rate without salary transfer | AED 8,659 |
| 4.49% | Example of a rate 0.5 percentage points higher | AED 8,884 |
| 5.84% | EIBOR for three months on 30 October plus 1.5% | AED 10,153 |
The calculations assume that the interest rate stays the same throughout the mortgage term. In practice, a fixed rate may apply only for the initial period, and repayments can change after the mortgage moves to a variable rate. These figures are estimates, not a mortgage offer. The actual repayment will depend on the bank’s terms, the approved interest rate and any additional charges.
Buying with cash or taking out a mortgage?
Paying in cash means avoiding mortgage interest, bank charges and monthly repayments. However, putting AED 2 million into one property leaves less money available for other investments, purchases or unexpected expenses. A mortgage requires less money upfront and allows the buyer to keep more savings available. The trade-off is a long-term debt, with interest and bank charges adding to the cost of the property.
There are additional costs to consider. For example, the Dubai Land Department charges a mortgage registration fee of 0.25% of the loan amount. For a mortgage of AED 1.6 million, this comes to AED 4,000. Property transfer and other purchase fees apply to both cash and mortgage buyers.
At 3.99%, the buyer would repay around AED 2.53 million over 25 years. Including the AED 400,000 down payment and the AED 4,000 registration fee, the total comes to approximately AED 2.94 million, about AED 935,000 more than paying in cash. This assumes the rate stays the same for the entire term. Other purchase and bank fees are not included.
Can you buy an off-plan property with a mortgage?
Yes. Buyers can use a mortgage to finance an off-plan property, subject to the bank’s approval and the applicable financing limits. However, the payment process is different from buying a completed property. Developers usually collect payments in instalments during construction, with the remaining balance due at handover or according to the payment plan in the sale agreement.
A buyer may pay the construction instalments from their own funds and take out a mortgage for the remaining balance at handover, subject to the bank’s approval. Since banks can finance only up to 50% of an off-plan property’s value, buyers must be prepared to cover the rest from their own funds.
Frequently Asked Questions
Common questions about buying property with a mortgage in the UAE.
Can I use a personal loan to pay the mortgage down payment?
No. The Central Bank of the UAE requires buyers to pay the down payment using their own funds. Personal loans and credit cards cannot be used to cover it.
Can non-residents get a mortgage in the UAE?
Yes. Some UAE banks offer mortgages to non-residents. The amount you can borrow, interest rates and eligibility requirements vary by bank.
Can I repay part of my mortgage early?
Yes, depending on your mortgage terms. Under Central Bank rules, the fee for repaying a mortgage early, in full or in part, cannot exceed 1% of the outstanding balance or AED 10,000, whichever is less, plus VAT. Some banks allow partial repayments without a fee. For example, FAB allows eligible customers to repay up to 25% of their outstanding loan each year without a fee during the variable-rate period. Check your mortgage agreement for the conditions that apply.
What additional costs should I budget for when buying property with a mortgage?
You should budget for the property transfer fee (4% of the property price in Dubai), mortgage registration fee, bank arrangement and valuation fees, and any agency fees. The total depends on the property and the fees charged by the bank and other parties involved.