Types of mortgage loans available in the UAE

Finding the right bank for a mortgage loan is the first step prior to a property hunt. Financial institutions provide different types of mortgages, which can vary depending on the preference and eligibility of the borrower. But before picking a particular type of mortgage, borrowers need to do their homework on the types of mortgage available with the banks in their region.Fixed-rate mortgage is traditional and well-known. The interest rate will remain the same throughout the loan period. The flat rate will be predefined during loan approval, which will be followed until the end of the tenure. At some institutions the fixed rate may not last for the entire tenure. Lenders charge a fixed rate for a certain period and then shift to a variable interest rate decided by the Emirates InterBank Offered Rate (Eibor).The variable rate is the inverse of the fixed rate. This keeps fluctuating on a daily basis. Current variable rates in the UAE start from 2.5 per cent. This can increase or decrease as determined by Eibor. With some lenders the standard variable rate is not as high as the fixed rate.