Sanity-checking a 5.67% two-year fixed mortgage quote in Dubai

S

sailsAndQuill

Buyer
Established
I have a mortgage quote at 5.67% fixed for two years on a Dubai property purchase around AED 5,285,000. The advertised rate initially looked lower, but the arrangement fees and applicable loan-to-value tier changed the picture. On total cash cost, the headline winner no longer wins.

For comparing lenders, would you prioritise APR, interest paid during the fixed period, or all cash costs over those two years? I am also looking at monthly affordability, portability and early-repayment terms because refinancing after year two may not be attractive.
 
I would compare total cash outflow over the period you realistically expect to keep that mortgage, not just the advertised rate. For the first two years, include payments, arrangement fees and any other compulsory lender charges, then separate principal repayment from the actual financing cost. APR is useful as a first filter, but it can obscure the timing if your plan is to refinance when the fixed period ends.
 
What loan amount and loan-to-value tier are you actually being quoted? The AED 5,285,000 purchase price alone is not enough to compare the offers, and the mortgage term also affects the monthly payment.

Also, when you say service charges, do you mean charges attached to the mortgage or the property's ongoing building service charges? The latter matter for affordability but should not make one lender look more expensive than another.
 
I would not limit the test to the two fixed years. That can make a fee-heavy deal appear acceptable on the assumption that refinancing will be easy. Run the monthly payment at the quoted rate, then run a less comfortable rate after reset. If the second figure strains the budget, a slightly dearer offer with better longer-term terms may be the safer choice.
 
I slightly disagree with dismissing APR as only a filter. If lenders calculate it on a genuinely comparable basis, it is a useful warning that the low headline rate is being offset elsewhere. It just should not be the final decision because early repayment and portability have value only under particular circumstances. Ask what happens in cash terms if you sell, refinance or keep the loan beyond two years.
 
Joanap's distinction is important. Building service charges belong in the overall property budget alongside the mortgage payment, but not in the lender-versus-lender calculation. Compulsory bank charges belong in both the affordability calculation and the mortgage comparison. Optional extras should be shown separately so they do not distort the result.
 
A simple comparison sheet would help here. Give each lender columns for initial cash required, monthly payments during the fixed period, principal remaining after two years, compulsory fees, and the cost of exiting at that point. Then add separate scenarios for keeping the loan after reset and for refinancing. Use the same loan amount, term and assumed exit date throughout; otherwise the totals are not comparable.
 
Be careful about treating portability as a substitute for refinancing flexibility. The useful questions are whether it applies to the type and value of the next property, whether a fresh affordability assessment is required, and what happens if the purchase and sale dates do not align. The exact effect depends on the lender's UAE terms, so I would want those conditions confirmed in writing rather than relying on the word “portable” in a summary.
 
On the facts given, I would rank the figures this way: first, a monthly payment you can comfortably carry; second, total two-year cost including compulsory fees; third, the balance and likely payment after the fixed period. Then use APR as a consistency check. The deciding comparison should include at least one scenario where refinancing after two years is unavailable or unattractive, since that is the assumption most likely to make a headline-led choice backfire.
 
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