Understanding Fixed vs. Variable Mortgage Rates in the UAE

A fixed rate keeps your interest rate and monthly payments the same for a set period (usually 1–5 years).

Pros:

• Stable, predictable payments

• Protection against rate increases

• Good for long-term budgeting

Cons:

• Higher starting rate

• Early repayment penalties

• No benefit if market rates drop

Variable Mortgage Rate

A variable rate (floating rate) changes over time based on market benchmarks like EIBOR.

Pros:

• Lower initial rate

• Possible savings if rates drop

• More flexibility for refinancing

Cons:

• Unpredictable monthly payments

• Risk if interest rates rise

• Harder to budget

Which Should You Choose?

• Choose fixed if you want payment stability and plan to stay long-term.

• Choose variable if you’re comfortable with risk and may benefit from falling rates.

• Consider hybrid options (fixed + variable) for a balanced approach.