K|Wise · Glossary
Fixed Rate
A mortgage rate that is locked in place for a set period — typically 1, 3, or 5 years in the UAE. After the fixed period the loan reverts to the lender's variable rate unless refinanced.
In plain English
A mortgage rate that is locked in place for a set period — typically 1, 3, or 5 years in the UAE. After the fixed period the loan reverts to the lender's variable rate unless refinanced.
What Fixed Rate means in practice
A fixed rate holds your interest rate — and therefore your instalment — steady for an agreed opening period, regardless of what the benchmark does. You are buying certainty, and the lender prices that certainty into the rate.
The fix is temporary. What matters almost as much as the headline number is what the loan reverts to when the fixed period ends, because that reversion rate governs the remaining two decades of the term.
How it works in the UAE
UAE lenders commonly offer one, three and five-year fixes, after which the loan reverts to an EIBOR-linked variable rate plus a margin. Many borrowers refinance at the end of the fixed period, which is why the early settlement fee and the reversion margin deserve as much attention as the fixed rate itself.
A worked example
A three-year fix at 4.49% on AED 1,500,000 holds the instalment at roughly AED 8,335 until year four. If it then reverts to EIBOR plus 1.75% and that computes to 6.00%, the instalment on the remaining balance jumps by several hundred dirhams a month.
Terms that come up alongside Fixed Rate
Cap
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 definitionEIBOR
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%).
Read the definitionEMI (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 definitionMortgage Registration Fee
A fee charged by the Dubai Land Department to register a mortgage against a property title — currently 0.25% of the loan amount plus a fixed AED 290 admin fee.
Read the definitionRefinancing
Replacing an existing mortgage with a new one — usually with a different lender — to achieve a lower rate, release equity, or improve terms.
Read the definitionStress Test
A lender's affordability check that simulates a higher interest rate to ensure the borrower can sustain repayments if rates rise. UAE banks typically stress-test 2% above the contractual rate.
Read the definition