Variable Rate Mortgage

The Variable Rate Mortgage plays an important role in Dubai's dynamic property market. With this form of financing, the interest rate is typically based on the Emirates Interbank Offered Rate (EIBOR) or for international financing on the LIBOR/SOFRwhereby the bank charges an additional surcharge.

How it works in Dubai:

• Interest rates are usually adjusted on a quarterly or half-yearly basis
• The bank's premium (margin) remains constant during the term
• The instalment amount can be adjusted in line with interest rate changes

Special features for the Dubai market:

In Dubai, many banks offer Caps (interest rate caps) that protect you from extreme interest rate rises. In addition, you often have the option of switching to a fixed interest rate variant during the term. This is particularly relevant as the property market in Dubai is heavily influenced by international economic developments.

Advantages and disadvantages:

• Advantages: Possible interest savings when market interest rates fall, often lower initial interest rates, greater flexibility for early repayment
• Disadvantages: Uncertain monthly burden, risk of rising interest rates, more complex financial planning required

For Investors in Dubai It is particularly important to note that variable mortgages are often offered in different currencies. Although this opens up opportunities through currency gains, it also harbours additional risks. The decision in favour of a variable rate mortgage should therefore always be made against the background of your personal risk tolerance and financial flexibility.

Recommendation:
Get support from a qualified financial advisor who is familiar with the special features of the Dubai market. Take into account the long-term development prospects of the region and your personal investment strategy.