K|Wise · Glossary
EIBOR
The Emirates Interbank Offered Rate — the benchmark interest rate at which UAE banks lend to each other. Variable mortgage rates are quoted as EIBOR plus a lender margin (e.g. 3M EIBOR + 1.50%).
In plain English
The Emirates Interbank Offered Rate — the benchmark interest rate at which UAE banks lend to each other. Variable mortgage rates are quoted as EIBOR plus a lender margin (e.g. 3M EIBOR + 1.50%).
What EIBOR means in practice
EIBOR is the reference rate that underpins variable-rate lending in the UAE. It is published for several tenors — one month, three months, six months and twelve months — and reflects the cost at which banks will lend to one another.
Your mortgage rate is not EIBOR itself but EIBOR plus a margin the lender sets and keeps fixed. The benchmark moves; the margin does not.
How it works in the UAE
Because the dirham is pegged to the US dollar, EIBOR broadly tracks US interest rate policy rather than local property conditions. Most UAE variable mortgages reference the 3-month tenor and reset quarterly, so a change in the benchmark reaches your instalment within a quarter.
A worked example
A mortgage quoted at 3-month EIBOR plus 1.50% costs 5.75% while EIBOR sits at 4.25%. If EIBOR falls to 3.75% at the next reset, the rate drops to 5.25% and the instalment is recalculated on the remaining balance and term.
Terms that come up alongside EIBOR
EMI (Equated Monthly Instalment)
The fixed monthly payment a borrower makes to the lender, covering both principal and interest. The EMI remains constant on fixed-rate periods but resets on variable rates each EIBOR reset date.
Read the definitionVariable Rate
A mortgage rate that moves in line with the EIBOR benchmark plus a fixed lender margin. The rate resets at agreed intervals — typically every 3 or 6 months.
Read the definitionAmortisation
The gradual repayment of a mortgage loan through scheduled monthly instalments of principal and interest. In the early years more of each payment goes to interest; in the later years more goes to principal.
Read the definitionBuy-to-Let Mortgage
A mortgage used to purchase a property that will be rented out rather than occupied by the borrower. Lenders assess the deal on projected rental income alongside the borrower's personal income.
Read the definitionCap
A contractual maximum on how much your variable mortgage rate can rise over a defined period. A common UAE structure caps the rate at 5.99% for the first 3 years.
Read the definitionConveyancing
The legal process of transferring property ownership from seller to buyer, including title checks, NOC issuance, mortgage registration, and the final Land Department transfer.
Read the definition