Introduction to Fixed Rate Mortgages in the UAE
The rate of interest applicable to you when taking a fixed rate mortgage will remain the same until the loan tenor ends. The monthly payments due on fixed-rate mortgages also remain the same for as long as the tenor runs. They are the exact opposite of adjustable rate mortgages in which the monthly payments charged to customers may be low during the initial stages of the mortgage but could potentially increase to almost double of the starting interest rates and monthly payments.
Types of Fixed Rate Mortgages
Thirty-year Fixed Rate Mortgage
The monthly payments and rates of interest associated with a thirty-year fixed rate mortgage are the same and spread out evenly over a period of thirty years. However, the payments being spread out over such a long period of time means that customers will be required to make payments for a longer term than they would with a mortgage for a shorter term.
Fifteen and twenty-year Fixed Rate Mortgage
The rate of interest and the term of a fifteen- and twenty-year fixed rate mortgage, the loan can be repaid off quicker and more equity can be built. However, although the monthly payments will get over quicker in comparison with a thirty-year mortgage, the rate of interest on a shorter term is generally higher.
Benefits of Fixed Rate Mortgages
- Customers need not worry about changes in the rate of interest as it will remain the same until the tenor ends.
- The rates of interest charged on fixed-rate mortgages are usually lower in comparison with adjustable-rate mortgages and other loans.
- The documentation procedures in a fixed-rate mortgage is fairly simple.
- Fixed-rate mortgages can be taken out to refinance any existing mortgages a customer may have. The fifteen- and twenty-year mortgages are more popular in such cases.
Features of Fixed Rate Mortgages
- In case of single-family homes, the amount of money that can be borrowed by a customer is usually limited to $417,000. However, the limits may vary depending upon the region in which you wish to acquire the property.
- The down payment to be made on a fixed-rate mortgage is between 5% and 20%.
- Customers who have a good credit history can make the most of fixed-rate mortgages as a good credit score makes it easier for them to avail the facility.
Top 10 banks offering Fixed Rate Mortgages in UAE
The following banks in the UAE offer mortgages at fixed rates for tenures of 25-30 years, for both UAE Nationals as well as Expatriates:
Before you apply for a fixed rate mortgage, make sure you consult with an advisor to find out which is the best deal for you.