An interest only mortgage in the UAE is possible, but only for investors, only for a limited time, and only if your bank chooses to offer it. Central Bank rules allow a deferred-principal period on investment loans for no more than five years from the first drawdown, and a home you live in must repay capital and interest from the first month. This guide, updated on 27 October 2026, explains the rule in plain words, shows what an interest only mortgage UAE investors might consider really costs on a worked AED 1.2 million example, and shows the payment jump that arrives when the interest-only period ends.
Published: 28 October 2026
Quick answer: can you get an interest only mortgage in the UAE?
Yes, but only on an investment property, and only at the bank’s discretion. The CBUAE Regulations Regarding Mortgage Loans (Circular 31/2013), Article 3, item 6 (“Interest Only Period”), say that loans with deferred principal repayment should only apply to investment loans, and should not allow non-repayment of principal for longer than five years from the date of first drawdown. Where principal is deferred, the lender must also be satisfied that you can meet principal and interest payments when the period ends.
In practice that means four things:
- An owner-occupied home is repaid from day one. Each instalment pays interest and part of the loan.
- The five years is a ceiling, not a promise. Some brokers say banks give one year, others say one to three, others say five. We found no bank page that publishes a standard period.
- It is not a standard retail product. We could not confirm a published interest-only home loan on any major UAE bank’s own website this session, so treat it as a case-by-case request.
- The loan does not get smaller during the period. When it ends, your payment rises, because the same balance must now be repaid over a shorter remaining term.
What the Central Bank rule actually says
The rule sits in the Central Bank’s Mortgage Regulations, which the CBUAE Rulebook shows as in force. We cross-checked the wording against three independent sources, because the Rulebook website blocked our automated access this session: the Rulebook text as quoted in search results, a 2026 guide from the international broker Enness Global (last updated 14 October 2026), and the law firm Al Tamimi’s summary of the Regulations. All agree on the points below.
| Point | What the rules say | Why it matters to you |
|---|---|---|
| Who can have it | Deferred principal “should only apply to investment loans” | Not available for the home you live in |
| Maximum period | No more than 5 years from first drawdown | The ceiling. Banks can offer less |
| End-of-period test | Lender must be satisfied you can pay principal and interest when it ends | Expect to be questioned on how you will cope with the higher payment |
| Debt burden ratio (DBR) | 50% cap. For investment property, at least two months of rental income is deducted | Rent is not counted in full |
| Maximum tenor | 25 years | The interest-only period uses up part of this, it does not extend it |
| Loan-to-value on a second or investment property | 60% for expats, 65% for UAE nationals | A 40% down payment for most expat investors |
One honest caveat. Al Tamimi notes that “investment loans” is not defined in the Regulations. So the line between an investment loan and a normal residential loan is, in practice, decided by the bank looking at your purpose and the property. If you plan to live in the property, do not describe it as an investment to obtain interest-only terms. That is a misstatement to your lender.
For the LTV and down-payment maths behind the 60% figure, read our guide to the second property mortgage and the 60% rule.
How long is the interest-only period? Why the sources disagree
The Rulebook sets a five-year maximum. Brokers quote anything from 12 months to five years. We are showing the disagreement rather than picking a number:
- Central Bank rule: up to 5 years from first drawdown.
- Oliva’s Dubai real estate glossary (broker/agent source): some banks offer 1 to 3 years, mainly on investment properties, usually at 60% to 65% LTV for stronger income profiles.
- Compare4Benefit (article dated 2024): typically one year.
- Gulf News (May 2023): these loans are often available only on terms of about five years.
- Enness Global: says it has access to a 12-month, interest-only refinance facility on residential property for high-net-worth borrowers, which it calls the closest UAE equivalent to a bridging loan.
None of these is a bank’s own published term. The honest conclusion: ask the bank for the exact period in writing, and assume it may be shorter than five years.
The real cost: AED 1.2 million example with the payment jump
Benchmarks used, so the example resembles the real market. The CBUAE Base Rate has been 3.90% since 17 September 2026 (the first rise since 2023, up from 3.65%). For a bank fixed rate we use 4.19%, which a broker comparison site (Mortgease, indicative pricing, final bank offer controls) lists for Emirates NBD’s two-year fixed rate with salary transfer for applications from 7 October 2026, reverting afterwards to 1-month EIBOR plus 1.99%. Other banks’ rates differ, and the same broker shows 4.59% without a salary transfer.
The hypothetical investor: buys an AED 2,000,000 apartment as a rental. At the 60% limit for a second or investment property, the loan is AED 1,200,000. We assume 4.19% throughout, a 25-year term and monthly payments. We hold the rate flat so you can see the effect of the structure alone. We have not included processing fees, valuation, insurance or the property purchase costs, which are covered in our real cost of buying property guide.
| Item | Standard repayment (capital + interest) | Interest-only for 3 years, then repay over 22 years | Interest-only for 5 years, then repay over 20 years |
|---|---|---|---|
| Monthly payment during the interest-only period | AED 6,461 | AED 4,190 | AED 4,190 |
| Monthly payment after it ends | AED 6,461 | AED 6,965 | AED 7,392 |
| Jump when the period ends | none | AED 2,775 a month (+66%) | AED 3,202 a month (+76%) |
| Cash saved during the period vs standard repayment | none | about AED 81,700 | about AED 136,200 |
| Loan balance owed at the end of the period | about AED 1,113,100 (3 years in) or AED 1,048,700 (5 years in) | AED 1,200,000 | AED 1,200,000 |
| Total interest over the whole loan | about AED 738,200 | about AED 789,700 | about AED 825,600 |
| Extra interest vs standard repayment | none | about AED 51,500 | about AED 87,400 |
All figures are calculated by Al Ghaf on a reducing-balance basis, rounded to the nearest AED 100 where shown with “about”. They are illustrations, not a quote.
What the table tells you:
- You save about AED 2,271 a month during the interest-only period (AED 6,461 minus AED 4,190). That is genuine cash-flow relief while a new rental is being let or while you wait for a sale.
- You pay for it later. The saving over three years (about AED 81,700) costs about AED 51,500 of extra interest. Over five years the saving (about AED 136,200) costs about AED 87,400 of extra interest.
- You build no equity from repayments. After five years you still owe the full AED 1,200,000, against about AED 1,048,700 on a standard loan. Any growth in your equity must come from the property price rising.
- The jump is large. A 66% to 76% rise in the monthly payment is why the Rulebook requires the bank to be satisfied about your capacity at the end of the period. If the payment of AED 7,392 would strain you, the product is wrong for you.
- If your rate is variable when the period ends, the jump can be larger. At a rate 1 percentage point higher, the same loan converts to about AED 7,633 (3-year case) or about AED 8,046 (5-year case). Our variable-rate stress test shows how a 1% move feeds through, and our guide on what happens when a fixed rate ends covers the reversion.
A note on the rate: the CBUAE moves the Base Rate in step with the US Federal Reserve, and the Fed meets again on 27 and 28 October 2026, so the Base Rate can change shortly after this article is published. See our note on the September 2026 rate hike for how pricing follows.
How rental income and the debt burden ratio affect approval
The Rulebook caps your total debt payments at 50% of gross income (the DBR) and says that for an investment property the lender must deduct at least two months of rental income to allow for periods without a tenant. So rent is never counted at 100%.
Illustration (hypothetical rent, not a market figure): if the apartment rents for AED 120,000 a year, two months is AED 20,000, which leaves AED 100,000 a year, or about AED 8,333 a month, of rent the bank may count. Banks often apply their own further haircut, so your bank’s figure can be lower.
Two points we cannot state as fact, so ask your bank:
- Whether it assesses your DBR on the interest-only payment (AED 4,190 in our example) or on the full amortising payment you will face later (AED 6,461 to AED 7,392). The Rulebook requires the lender to be satisfied you can meet principal and interest at the end, so a cautious bank may test the higher figure.
- Whether the end-of-period test is done on day one or repeated near the end of the period.
For a 50% DBR, a payment of AED 7,392 on its own needs gross monthly income of about AED 14,800 if there were no other debts and no rent counted. Existing loans and cards raise that, which is why our guide on personal loan and credit card debt before a UAE mortgage is worth reading first. For how banks size your borrowing, see UAE mortgage eligibility.
Who an interest-only mortgage suits, and who should avoid it
It can suit you if:
- You are an investor with a clear plan to sell or refinance before or at the end of the period, for example an off-plan unit you expect to sell on handover.
- You have substantial cash or other assets that can repay the principal if the plan changes. Enness Global’s UK interest-only guidance makes the same point: borrowers should be able to demonstrate financial stability and the means to repay the capital.
- Rent covers the interest comfortably, so the property is cash-flow positive during the period. Read our buy-to-let mortgage guide for how banks count rent.
- You expect your income to rise materially and have the discipline to make voluntary principal payments.
Avoid it if:
- You are buying the home you will live in. It is not permitted, and the product is not designed for that.
- You want a lower payment because affordability is already tight. Interest-only does not make an unaffordable loan affordable, it postpones the problem and increases total interest.
- You are hoping to use it as a hardship tool on an existing loan. A deferral or restructure is a different request, covered in our guides on mortgage payment deferral and what happens when you miss a payment.
The hidden risks of an interest-only mortgage in the UAE
- No equity from repayments. Your equity rises only if the price rises. If values fall, you may owe more than the property is worth. See what happens when the bank valuation comes in below the price.
- Refinancing at the end is not guaranteed. To refinance you will need to pass the LTV and DBR tests again, at the then-current rules and rates. Gulf News warned in 2023 that borrowers without about 50% equity may struggle to remortgage when the deal ends.
- Higher total interest. Our example shows about AED 51,500 to AED 87,400 extra on a AED 1.2 million loan.
- Rate exposure. After any fixed period the rate typically reverts to a margin over EIBOR, and a rising rate lifts the payment on top of the structural jump.
- Early settlement costs. If you exit early, check the penalty. In the UAE a cap applies, explained in our early settlement guide.
- Product scarcity. Because few banks publish it, your negotiating options are narrower, and the terms may change between a verbal indication and the formal offer.
Cheaper ways to cut your payment without interest-only
If your goal is simply a lower monthly outgo, these routes are better documented in the UAE market:
- Use the full term. The Rulebook maximum is 25 years. Our 25-year versus 15-year comparison shows how term changes the payment and total interest.
- Choose the best fixed rate. On our AED 1.2 million example, each 0.25% off the rate changes the monthly payment by roughly AED 165. Compare banks, and see how a salary transfer changes pricing in our salary transfer guide.
- Overpay when cash allows. Read how partial prepayment works and where the fee trap is.
- Refinance later, if rates fall. See when to refinance.
What to ask the bank, in writing
Because interest-only is discretionary, collect the answers on paper before you commit:
- Is an interest-only period available on this property and loan? For how many months?
- What is the maximum LTV with interest-only, and is it lower than the 60% standard for investment property?
- What rate applies during the period, and is it fixed? What does it revert to?
- How will you calculate my DBR: on the interest-only payment or the amortising payment?
- How is rental income counted, and what haircut do you apply beyond the two-month deduction?
- What happens at the end: does the loan re-amortise over the remaining tenure, or must I refinance?
- Can I make partial principal payments during the period without a penalty?
- What are the early settlement charges and all fees?
Frequently asked questions about interest only mortgages in the UAE
Are interest-only mortgages available in the UAE?
Yes, but rarely and only for investment loans. The Central Bank allows deferred principal repayment on investment loans for up to five years from first drawdown. Enness Global says UAE homes you live in must be repaid on capital and interest from the start. Whether a bank offers it is at its discretion.
What is the maximum interest-only period in the UAE?
Five years from the date of first drawdown, under Article 3, item 6 of the CBUAE Regulations Regarding Mortgage Loans. Banks can offer shorter periods, and broker sources report anything from 12 months to five years.
Can I get an interest-only mortgage on my own home in Dubai?
No. The rule restricts deferred principal to investment loans. If you plan to live in the property, expect a standard capital-and-interest mortgage.
How much does the payment rise when the interest-only period ends?
On our AED 1.2 million example at 4.19% over 25 years, the payment rises from AED 4,190 to about AED 6,965 after three years (+66%), or to about AED 7,392 after five years (+76%). The rise is larger if your rate also increases.
Is an interest-only mortgage cheaper overall?
No. It lowers the payment in the early years but increases total interest, by about AED 51,500 (3-year period) to AED 87,400 (5-year period) on our example, because you owe more for longer.
What LTV applies to an interest-only mortgage in the UAE?
The Rulebook limit for a second or subsequent property or an investment property is 60% for expats and 65% for UAE nationals. A bank may set a lower figure for interest-only. We could not find a bank that publishes one, so ask in writing.
Which UAE banks offer interest-only mortgages?
We could not confirm a published interest-only retail home loan on any named bank’s website this session, so we do not name one. Some brokers say a few banks offer it on request for investors. Ask your bank or a broker for a written indication.
Does rental income count towards an interest-only mortgage?
Partly. For investment property the Rulebook requires lenders to deduct at least two months of rental income from the DBR calculation, and many banks apply further haircuts. Ask how your bank counts it.
What happens at the end of the interest-only period?
You must start repaying principal, so your payment rises. The Rulebook requires the lender to be satisfied you can meet principal and interest at that point. Banks typically re-amortise the balance over the remaining term, but confirm your own bank’s treatment, because some may require a refinance.
Is there an interest-only option for Islamic home finance?
We did not find a verified Islamic product with an interest-only period in this research, so we cannot confirm one. Ask your Islamic bank whether a comparable profit-only period is offered and on what terms.
Can I use interest-only to get through a hard time with my payments?
It is not designed for that. If you are struggling with an existing loan, speak to your bank about a deferral or a restructure, and read our guides on payment deferral and missed payments.
How Al Ghaf can help
Al Ghaf Mortgage offers two services: Mortgage Consulting and Banking Consultation. If you are an investor weighing an interest-only structure against a standard loan, we can help you work through your own numbers, prepare the questions above for your bank, and compare the payment you will face at the end of the period with your income and plans. We do not guarantee any bank’s offer, because interest-only terms are always at the bank’s discretion.
To talk it through, use our Contact Us page or message us directly on WhatsApp.
Message Al Ghaf on WhatsApp: +971 50 127 6925
This article is general information, not financial or legal advice. Rules, bank policies and rates change. Confirm all terms with your lender before acting.
If you are still working out how much a bank will actually lend a non-resident buyer, this guide on whether a foreigner can get a mortgage in Dubai and which LTV caps banks really approve is a useful companion.