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In a standard amortising UAE mortgage, each monthly payment includes interest plus a principal portion. At the start, the interest share is larger because the outstanding balance is larger. Over time, the interest share falls and the principal share rises. The CBUAE mortgage-loans rulebook also states the maximum mortgage tenor is 25 years, which caps how slowly an owner-occupier mortgage can amortise.
How amortisation works
For an amortising mortgage, the payment amount is fixed or near-fixed within the agreed rate period, but the composition of that payment changes. Interest is calculated on the remaining balance, so it starts high and falls as the balance falls. The principal component is whatever remains after interest for that month has been covered.
Step-by-step: how to read an amortisation table
- 1
Start with the loan amount
This is the opening balance after down payment and approved financing.
- 2
Apply the annual interest rate and loan tenor
These determine the scheduled monthly instalment. In the UAE, the CBUAE mortgage-loans rulebook sets a 25-year maximum tenor.
- 3
Calculate the monthly interest
Monthly interest equals the outstanding balance multiplied by the monthly rate.
- 4
Calculate the principal repayment
Principal repaid in the month equals the instalment minus that month's interest.
- 5
Update the balance and repeat
The outstanding balance falls each month, so later interest charges become smaller and principal repayment becomes larger.
Worked example 1: AED 1,000,000 loan at 5.0% over 25 years
- Loan Amount (AED)
- 1,000,000
- Rate (p.a.)
- 5.0%
- Tenor (years)
- 25
- Monthly Payment (AED)
- 5,845.90
| Month | Payment (AED) | Interest (AED) | Principal (AED) | Balance (AED) |
|---|---|---|---|---|
| 1 | 5,845.90 | 4,166.67 | 1,679.23 | 998,320.77 |
| 2 | 5,845.90 | 4,159.67 | 1,686.23 | 996,634.54 |
| 3 | 5,845.90 | 4,152.64 | 1,693.26 | 994,941.28 |
| 4 | 5,845.90 | 4,145.59 | 1,700.31 | 993,240.97 |
| 5 | 5,845.90 | 4,138.50 | 1,707.40 | 991,533.57 |
| 6 | 5,845.90 | 4,131.39 | 1,714.51 | 989,819.06 |
| 7 | 5,845.90 | 4,124.25 | 1,721.65 | 988,097.41 |
| 8 | 5,845.90 | 4,117.07 | 1,728.83 | 986,368.58 |
| 9 | 5,845.90 | 4,109.87 | 1,736.03 | 984,632.55 |
| 10 | 5,845.90 | 4,102.64 | 1,743.26 | 982,889.28 |
| 11 | 5,845.90 | 4,095.37 | 1,750.53 | 981,138.75 |
| 12 | 5,845.90 | 4,088.08 | 1,757.82 | 979,380.93 |
Worked example 2: AED 1,500,000 loan at 4.5% over 20 years
- Loan Amount (AED)
- 1,500,000
- Rate (p.a.)
- 4.5%
- Tenor (years)
- 20
- Monthly Payment (AED)
- 9,489.74
| Month | Payment (AED) | Interest (AED) | Principal (AED) | Balance (AED) |
|---|---|---|---|---|
| 1 | 9,489.74 | 5,625 | 3,864.74 | 1,496,135.26 |
| 2 | 9,489.74 | 5,610.51 | 3,879.23 | 1,492,256.03 |
| 3 | 9,489.74 | 5,595.96 | 3,893.78 | 1,488,362.25 |
| 4 | 9,489.74 | 5,581.36 | 3,908.38 | 1,484,453.86 |
| 5 | 9,489.74 | 5,566.70 | 3,923.04 | 1,480,530.82 |
| 6 | 9,489.74 | 5,551.99 | 3,937.75 | 1,476,593.07 |
What changes your amortisation profile
- A lower rate reduces the interest component and the total cost of borrowing.
- A shorter tenor increases the monthly payment but reduces total interest and accelerates equity build-up.
- A longer tenor lowers the monthly payment but slows principal reduction and raises total interest.
- Prepayments or lump-sum reductions can shorten the schedule, subject to the lender's terms.
Fees related to a UAE mortgage but not part of amortisation
- DLD mortgage registration fee of 0.25% of mortgage value
- DLD sale-registration charges
- Valuation fees and bank arrangement fees
- Any legal review or mortgage-advisory cost
Common mistakes
- Thinking equal instalments mean equal principal every month. They do not.
- Ignoring how much extra interest a longer tenor creates.
- Confusing LTV with amortisation. LTV is about borrowing size; amortisation is about repayment over time.
- Comparing two mortgages only on monthly instalment and not on total interest paid.
Official links
Need a live repayment model?
A mortgage adviser can model amortisation using the actual rate structure, tenor, salary cap, and fee stack your bank is offering rather than the simplified examples on this page. This page is informational only and is not lending advice.
References
- CBUAE: https://rulebook.centralbank.ae/en/rulebook/regulations-regarding-mortgage-loansOfficial mortgage-loans rulebook including maximum tenor.
- DLD: https://dubailand.gov.ae/en/eservices/grant-property-mortgage/Official mortgage registration-fee context.
- DLD: https://dubailand.gov.ae/en/eservices/property-sale-registration/Official sale-registration process context.
Informational only. The example tables are illustrative and not a lending offer. Actual bank products can vary by rate type, re-pricing period, prepayment terms, and underwriting outcome.