Home Loan Interest Rate in UAE, Dubai

Home Loan Interest Rate in UAE

A home loan, or mortgage, is a financial product that allows you to purchase property by borrowing funds from a bank or other lending institutions. The loan is repaid over a specified period, usually with interest.

Understanding home loan interest rates in UAE is crucial as they directly impact your monthly payments and overall loan costs. These rates can vary based on factors, such as the central bank's policies, inflation, and your credit profile. Having a fundamental understanding of interest rate structures is essential for making well-informed decisions and managing your finances better.

Top Home Loan Plans in UAE

Dubai Islamic Bank

Plan Name First Time Buyers

Minimum Salary (AED) AED 12,000

Maximum Amount (AED) 50,000,000

Fixed Rate 1.79%

Down payment 20%

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ADCB

Plan Name Standard Mortgage Loan

Minimum Salary (AED) AED 15,000

Maximum Amount (AED) 20,000,000

Fixed Rate NA

Down payment 20%

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Standard Chartered Bank

Plan Name Saadiq Home Finance

Minimum Salary (AED) AED 15,000

Maximum Amount (AED) 18,000,000

Fixed Rate 1.66%

Down payment 20%

Apply Now

ADIB

Plan Name Home Loan For Expats

Minimum Salary (AED) AED 15,000

Maximum Amount (AED) 15,000,000

Fixed Rate 2.06%

Down payment 25%

Apply Now

Table of Content

Home Loan Interest Rate in UAE
Top Home Loan Plans in UAE
Types of Home Loan Interest Rates
Top Banks Home Loan Interest Rates in Dubai, UAE
Factors Affecting Mortgage Interest Rates
Frequently Asked Questions

Types of Home Loan Interest Rates

In the UAE, individuals can choose between two types of house loan interest rates— Fixed Interest Rate and Reducing Interest Rate.

Let us understand these with examples:

Flat Rate Interest

Story: Ahmed buys his dream home and opts for a flat rate loan. He benefits from consistent monthly payments, making his budgeting simpler. However, he ends up paying more in total interest compared to a reducing rate loan because the interest is calculated on the original loan amount throughout the term.

Ahmed takes out a home loan of AED 500,000 at a flat rate of 5% for 10 years. The flat rate means the interest is calculated on the full principal amount throughout the loan term.

Each year, Ahmed pays interest on AED 500,000, which amounts to AED 25,000 annually. This flat rate results in a constant interest payment of AED 25,000 every year, irrespective of how much principal he has repaid.

Tap to get an in-depth understanding of fixed interest rate home loans!

Reducing Balance Interest

Story: Jessica buys her home and opts for a reducing balance loan. As she makes payments, she notices her interest charges decrease because the interest is calculated on the lesser remaining amount. She ends up paying less interest over the life of the loan compared to the flat rate option, making her overall cost lower.

Jessica applies for a mortgage loan of AED 500,000, but with a reducing balance interest rate of 5% for the same term. With this method, the interest is calculated on the remaining principal amount as it decreases over time.

Initially, Jessica pays interest on the full AED 500,000, but as she repays the principal each month, the outstanding amount decreases, leading to a reduction in her interest payments. Consequently, as the principal decreases, her interest payments also decrease.

Tap to get an in-depth understanding of reducing interest rate home loans!

Top Banks Home Loan Interest Rates in Dubai, UAE

Given below are the top 8 home loans, home loan interest rates, and their interest rates in the UAE:

Bank Home Loan	Interest Rate	Features/ Benefits
RAKBANK- Home In One	Reducing Rate- Starting at 4.03% per annum (fixed for 5 years)	Easy access to funds at any time Zero in-principle approval fees
Standard Chartered- Saadiq Home Finance	3 Months- 4.98% EIBOR 6 Months- 4.89% EIBOR 12 Months- 4.66% EIBOR 36 Months- 4.2% SCBLR/SCBMR 60 Months- 4.12% SCBLR/SCBMR Note: Rates as on 7th August 2024	No valuation or processing fees Complimentary property Takaful for life Quick loan application approval within 2-7 working days Repayment tenure of up to 25 years Access to home finance details via mobile banking
Emirates NBD Home Loans for UAE Nationals	Tentative Reducing Rates- Starting at 7.15% per annum	Finance up to 85% of the property value Loan available for self-employed and salaried employees Apply with a co-borrower No application fees Complimentary property and life insurance Mortgage available for Government Housing Programmes Free partial settlement during the duration of the loan
Emirates NBD Home Loans for UAE Expats	Tentative Reducing Rates- Starting at 7.15% per annum	Finance up to 85% of the property value Loan available for self-employed and salaried employees Apply with a co-borrower No application fees Complimentary property and life insurance Free partial settlement of up to 20% of the loan amount
Emirates Islamic- Home Finance Manzili	Profit Rate (Indicative) Benchmark Rate (1/ 3/ 6/ 12 months EIBOR) + Margin ranging from 1.74% to 4.25% per annum APR (Indicative) Benchmark Rate (1/ 3/ 6/ 12 months EIBOR) + Margin ranging from 1.83% to 4.35% per annum	Availability of variable and variable + fixed rates High finance amount of up to 80% of the property (for expats) and 85% of the property (for UAE nationals) Loan solutions for buying, transferring, and cash release for freehold properties in the UAE Flexible loan repayment tenure of up to 25 years
ADCB- Standard Mortgage Loan	Starting from 4.5% per annum	Interest Rates Hybrid Option: Fixed rates for initial years and variable later Variable Rate Option: EIBOR + Margin Finance amount — up to 85% of the property value for UAE nationals and up to 80% for UAE expats Finance amount of up to 50% of the property value for non-residents 200 TouchPoints for every AED 1,000 of the loan amount Partial settlement of mortgage at any time Switch to a different home loan variant during the loan tenure at any time Availability of after-sales mortgage helpline and service Flexible loan repayment tenure of up to 15 years for Non-residents and up to 25 years for UAE nationals and expats
Sharjah Islamic Bank- Real Estate Finance	Reducing Rate- Starting from 4.25% per annum	Finance amount of up to AED 8 million Flexible loan tenure of up to 25 years Availability of multiple fixed-rate period options - 1, 3, and 5 years Salary transfer not required Loan available for self-employed and salaried individuals Wide geographical coverage Get a pre-approved loan
CBI Home Loan for Salaried Individuals	Interest rates range from 3.49% to 4.5% per annum	Salary transfer not mandatory Loan available for self-employed and salaried individuals Quick loan application processing Complimentary Reward Mastercard credit card for life without any annual fee Open a new home loan savings account with 2% interest per annum and no cap Free upgrade to the CBI First priority

Factors Affecting Mortgage Interest Rates

Mortgage interest rates are influenced by the following factors:

Central Bank Policies - Interest rates are influenced by the UAE Central Bank’s monetary policy. Changes in home loan rates occur if the Central Bank adjusts its benchmark rates.

Inflation Rates - Higher inflation leads to higher interest rates as banking institutions aim to maintain their profit margins.

Economic Conditions - In a strong economy, interest rates are usually lower due to increased trustworthiness towards borrowers, while economic instability can drive rates up.

credit Score - Borrowers with good credit scores receive lower interest rates because they are considered lower risk, while those with poor scores face higher rates due to perceived higher risk.

Loan Term - Shorter loan terms generally have lower interest rates compared to longer terms as they represent reduced risk for banks over a shorter period.

Loan-to-Value Ratio (LTV) - A higher LTV ratio (loan amount relative to property value) often results in higher interest rates, as it indicates higher risk for the bank.

Let us see what loan seekers have to ask about mortgage interest rates in the UAE!