The interest rate a UAE bank quotes on day one is rarely the rate you end up paying across the life of the loan. The small print on reversion, EIBOR margin, and rate review frequency is where the cost lives.
Interest rate is the annual percentage a bank charges on the mortgage principal. In the UAE mortgage market, most products quote an initial fixed period at one headline rate (1-5 years, occasionally 7) and then revert to a variable rate benchmarked to EIBOR (Emirates Interbank Offered Rate) plus a bank margin. The margin is what locks in for the life of the loan. EIBOR floats.
As of recent UAE pricing, a 3-year fixed on a standard mortgage sits in the 4.2-5.0% range for strong-income borrowers, reverting to EIBOR + 1.5-2.5% thereafter. That reversion-margin number is the negotiation everyone forgets to have at signing, because the fix feels far away.
A client last year signed a 5-year fix at 3.99% without querying the reversion margin. It came in at EIBOR + 2.75%. In year six, with EIBOR at 4.4%, his rate will be 7.15%. Avoidable.
Negotiate the margin, not just the headline. Always.
Related: Fixed Rate, Variable Rate, Mortgage, Financing Cost.