UAE fixed rates are short — typically one to five years on a loan that runs twenty-five. What happens at the end of the fixed period is written into your offer letter, and for most borrowers it is the most expensive clause they never read: the loan reverts to a variable rate of EIBOR plus a margin.
How reversion actually works
On expiry, your rate becomes the reversion formula from your facility letter — say, 3-month EIBOR plus a margin of around 2%. Two properties of this formula matter:
- It moves. Your payment now changes as EIBOR changes, for the rest of the term — the mechanics are covered in our variable rate guide.
- The margin was set on the day you signed — often generously in the bank's favour, because most attention was on the teaser rate. Reversion margins on old contracts are frequently far above what a new customer would be offered today.
The result: borrowers commonly see their instalment jump meaningfully in a single month, without the bank doing anything but following the contract.
What the jump can cost
Illustrative arithmetic: on AED 1.5 million outstanding, each 1% of extra rate costs roughly AED 15,000 a year in interest. A reversion that lands 1–1.5% above a competitive market rate — entirely common — is therefore AED 15,000–22,000 a year of avoidable cost, recurring until you act. Compare that with the one-off cost of escaping: the early settlement fee is capped at 1% of the outstanding balance or AED 10,000, whichever is lower (how the cap works).
Your three options, ranked by effort
1. Reprice with your own bank. Banks have retention pricing they do not advertise: a written request — ideally referencing a competing offer — can move your margin without changing banks. Costs little, sometimes works well, and our guide to negotiating a rate reduction scripts the conversation.
2. Buy out to another bank. The full market reset: a new lender settles your loan and you start on today's pricing — either a fresh fixed period or a competitive variable margin. Weigh the switching costs (settlement fee, valuation at AED 2,500–3,000 plus VAT, registration, any arrangement fee) against the annual saving; on most mid-size balances with a 1%+ rate gap the payback is under a year. This is exactly what our buyout service does all day.
3. Do nothing — deliberately. Occasionally right! If your balance is small, your remaining term short, or your reversion margin genuinely competitive, switching costs can outweigh the gain. The mistake is not staying — it is staying without having checked.
The ninety-day playbook
- T minus 90 days: find your fixed-rate expiry date and reversion formula in the offer letter. (Expiry runs from disbursement — check the date, don't assume.)
- T minus 60: get today's market quotes for your balance and profile — a broker does this across every bank in one pass. Ask your own bank for its retention offer in parallel.
- T minus 30: decide: reprice, buy out, or hold. Buyouts take a few weeks end to end, so starting before expiry means little or no time spent on the reversion rate at all.
- Expiry month: check the first variable instalment matches the formula. Errors happen; catching them is your job, not the bank's.
Should you fix again?
Whether to take a new fixed period or ride the variable margin is a genuine judgement call — it depends on where EIBOR sits, the premium charged for certainty, and how much payment volatility your budget tolerates. Our fixed versus variable guide gives the decision framework, and the calculator shows what each path costs monthly.
The habit worth keeping
A mortgage is not a set-and-forget product in the UAE — it is a contract with a built-in price rise on a known date. Put the expiry in your calendar the day you sign, and treat the ninety days before it as a shopping window. If your fixed period ends in the next few months, send us the basics — balance, current rate, expiry date — and we will tell you the same day whether staying or switching wins.