1-year fixed rate mortgage UAE 2026: who offers the lowest and is it right for you?
The best 1-year fixed rate mortgage in the UAE in June 2026 is 3.25% from National Bank of Fujairah (Islamic), and 3.70% from HSBC for conventional borrowers. A 1-year fix gives you the lowest available introductory rate and lets you refinance to a new deal after 12 months. The trade-off is that you may pay an early exit fee (up to AED 10,000) if you switch within 3 years, and your rate reverts to EIBOR plus the bank's margin if you do not refinance. At current EIBOR of 3.69%, reversion rates run from 4.94% to 5.19% depending on the lender.
What "1-year fixed" means on a UAE mortgage
In the UAE, no bank offers a mortgage fixed for its full 25-year term. Instead, you get an introductory fixed period, typically 1, 2, 3, or 5 years. The 1-year fixed is the shortest available and usually gives the lowest rate, because the bank takes on less rate risk over a shorter commitment.
After 12 months, your mortgage automatically reverts to a variable rate calculated as 3-month EIBOR plus the bank's fixed margin. That margin is set when you take out the mortgage and does not change for the life of the loan. So the key question on any UAE mortgage is not just the introductory rate, but the margin you lock in for the variable period.
1-year fixed rates by lender: June 2026
The table below shows published 1-year introductory rates from the main UAE lenders, ranked from lowest to highest. All rates are for salaried borrowers buying a first residential property under AED 5 million with a 20% deposit.
| Lender | Type | 1-year intro rate | Reversion margin | Monthly on AED 1.5M (25yr) |
|---|---|---|---|---|
| National Bank of Fujairah | Islamic | 3.25% Lowest | EIBOR + 1.25% | AED 7,310 |
| Dubai Islamic Bank (DIB) | Islamic | 3.49% | EIBOR + 1.35% | AED 7,494 |
| ADIB | Islamic | 3.55% | EIBOR + 1.40% | AED 7,530 |
| HSBC UAE | Conventional | 3.70% Best conventional | EIBOR + 1.25% | AED 7,672 |
| Emirates NBD | Conventional | 3.75% | EIBOR + 1.30% | AED 7,710 |
| ADCB | Conventional | 3.85% | EIBOR + 1.50% | AED 7,790 |
| First Abu Dhabi Bank (FAB) | Conventional | 3.99% | EIBOR + 1.50% | AED 7,903 |
Monthly payments for AED 1.5M loan, 25-year term, reducing-balance amortisation at the introductory rate. Published rates for salaried first-property buyers, 20% deposit, loan under AED 5M. Actual rates depend on borrower profile. Source: MortgageCompare.ae rate data, June 2026.
The monthly payment gap between the cheapest and most expensive 1-year fixed option on a AED 1.5M loan is AED 593 per month, which adds up to AED 7,116 over the course of the 1-year introductory period. Over 3 introductory years, choosing the best available rate saves around AED 21,000 compared to the most expensive option.
The case for a 1-year fix right now
With the CBUAE base rate at 3.65% in June 2026 and the US Federal Reserve still considering further rate cuts, many UAE borrowers are deliberately choosing 1-year fixes to keep their options open. Here is why that makes sense:
- Lowest available intro rate. A 1-year fix consistently gives the lowest starting rate of any fixed period. On a AED 1.5M loan, taking the HSBC 1-year rate of 3.70% instead of a hypothetical 3-year rate of 3.99% saves about AED 247 per month during the introductory period.
- Flexibility to refinance. After 12 months you can approach other lenders and secure a new introductory rate, effectively rolling from one deal to the next. This "roll strategy" lets you capture rate cuts as they happen rather than being locked into a longer fixed period.
- EIBOR may fall. If EIBOR drops by 0.50% during 2026, reversion rates after your 1-year fix would be 0.50% lower than today's figures. A shorter fix means you could refinance sooner and lock in a new, lower starting rate.
The risks of a 1-year fix
A 1-year fix is not always the right choice. There are genuine downsides:
- Rate uncertainty after 12 months. If EIBOR rises during your intro year, your reversion rate is higher than today's figures. You would need to refinance quickly or absorb higher payments.
- Early exit fees apply for 3 years. Under CBUAE rules, banks can charge up to 1% of the outstanding balance (capped at AED 10,000) if you refinance within the first 3 years of a mortgage. So switching after year 1 typically costs up to AED 10,000 in exit fees, plus any arrangement fees at the new lender.
- Refinancing takes time and paperwork. Each buyout requires a new application, valuation, and DLD mortgage registration. It typically takes 4 to 6 weeks and requires up-to-date documents. You need to start the process at least 2 months before your intro period ends to avoid a gap.
- No rate certainty for budgeting. If your income is variable or tight, a 1-year fix followed by uncertainty about the next deal can make budgeting harder than a 3-year fix that locks in payments for longer.
The roll strategy works best when rates are falling or stable. If EIBOR rises sharply, rolling between 1-year fixes gives you less protection than a 3 or 5-year fix. Your decision should reflect your expectation of the rate direction over the next 3 to 5 years.
How to refinance at the end of the year
Refinancing (a mortgage buyout) at the end of a 1-year intro period follows the same steps as applying for any mortgage. Start about 8 weeks before your intro period expires:
- Compare current market rates. Use the rates comparison page to see which lenders are offering the best introductory rates at the time. Rates change quarterly.
- Apply for a new pre-approval. Get an in-principle letter from 2 or 3 lenders. This takes 2 to 5 working days and does not damage your AECB score if done within a short window.
- Request a settlement figure. Ask your current lender for an early settlement letter, which shows the outstanding balance and any exit fees. At this stage you will know the AED 10,000 exit fee cap applies.
- New valuation. The new lender commissions a valuation. If the property value has risen, your new LTV may be lower, which sometimes unlocks a better rate.
- Complete the transfer. The new lender settles the old mortgage directly. You sign a new facility agreement and pay the DLD mortgage registration fee (0.25% of the loan, plus AED 290) on the new loan.
The total cost of switching: up to AED 10,000 exit fee, plus approximately AED 3,500 to AED 5,000 in valuation and new mortgage registration fees. On a AED 1.5M loan, the savings from securing a 0.30% lower intro rate for the next year (around AED 337/month) can offset those switching costs within 5 months.
1-year vs 2-year vs 3-year fix: a direct comparison
| Fix length | Typical rate premium vs 1-year | Payment certainty | Flexibility | Best for |
|---|---|---|---|---|
| 1-year | None (lowest rate) | 12 months | High | Rate-followers, those expecting cuts |
| 2-year | +0.10% to +0.20% | 24 months | Medium | Balanced approach |
| 3-year | +0.20% to +0.40% | 36 months | Low (exit fee applies) | Certainty seekers, variable income |
| 5-year | +0.30% to +0.50% | 60 months | Very low | Maximum stability, longer-term planning |
Typical rate premiums for longer fix periods over the 1-year equivalent. Actual premiums vary by lender and market conditions. Source: MortgageCompare.ae analysis, June 2026.
What the reversion rate looks like after your 1-year fix
After 12 months, every borrower on a 1-year fix faces a rate reset. Here is what reversion rates look like at current EIBOR of 3.69%, by lender margin:
| Reversion margin | Reversion rate at EIBOR 3.69% | Monthly on AED 1.5M, 24yr remaining |
|---|---|---|
| EIBOR + 1.25% (e.g. HSBC, NBF) | 4.94% | AED 9,048 |
| EIBOR + 1.30% (e.g. Emirates NBD) | 4.99% | AED 9,112 |
| EIBOR + 1.35% (e.g. DIB) | 5.04% | AED 9,176 |
| EIBOR + 1.40% (e.g. ADIB) | 5.09% | AED 9,240 |
| EIBOR + 1.50% (e.g. ADCB, FAB) | 5.19% | AED 9,369 |
Monthly payment at reversion assuming AED 1.5M loan, 24 years remaining after year 1, reducing-balance amortisation. EIBOR is variable; if EIBOR falls by 0.50%, each reversion rate and payment falls by the same 0.50% / corresponding amount. Source: MortgageCompare.ae calculator, June 2026.
The jump from intro to reversion is significant: from 3.70% to 4.94% adds roughly AED 1,376 per month on a AED 1.5M loan if you stay with HSBC at reversion. This is why the vast majority of UAE borrowers refinance at the end of each introductory period rather than sitting on the reversion rate.
Who should choose a 1-year fixed mortgage in the UAE
A 1-year fix suits you if:
- You want the lowest possible starting rate and are confident you will refinance at the end of the year.
- You believe EIBOR may fall over the next 12 months and want to capture a lower reversion rate when you next refinance.
- You are buying an investment property and value flexibility over payment stability.
- Your income is stable and you can absorb some rate uncertainty after month 12.
A 1-year fix is less suitable if:
- You find the refinancing process stressful or administratively difficult and would prefer to set payments and forget them for a few years.
- Your income is variable and you need payment certainty for budgeting.
- You think EIBOR will rise over the next year, making your reversion rate higher than today's figures.
- You plan to sell the property within 2 to 3 years and want to minimise switching costs.
Frequently asked questions
What is the best 1-year fixed rate mortgage in the UAE in 2026?
As of June 2026, the best 1-year fixed profit rate is 3.25% from National Bank of Fujairah (Islamic), and the best conventional 1-year rate is 3.70% from HSBC. Emirates NBD offers 3.75%, ADCB 3.85%, and FAB 3.99%. See our rates comparison page for the full current table.
Is a 1-year fix better than a 3-year fix in the UAE right now?
For borrowers who expect EIBOR to fall or hold flat over the next year, and who are willing to refinance, a 1-year fix is typically the better choice in the current market. For those who value certainty and want to avoid the paperwork of annual refinancing, a 3-year fix costs a little more but saves time and stress.
Can I refinance after 1 year without an exit fee?
No. Under CBUAE mortgage regulations, banks can charge an early exit fee of up to 1% of the outstanding balance (capped at AED 10,000) for refinancing within the first 3 years. Switching after year 1 is possible but typically triggers the AED 10,000 fee. After year 3 there is no exit fee.
What happens to my rate after the 1-year fixed period?
After 12 months your mortgage reverts to 3-month EIBOR plus the margin agreed at origination. At current EIBOR of 3.69%, typical reversion rates run from 4.94% (HSBC/NBF margin 1.25%) to 5.19% (ADCB/FAB margin 1.50%). You can refinance to a new lender at any point, subject to the exit fee rules above.
Do all UAE banks offer 1-year fixed rate mortgages?
Most major UAE lenders offer a 1-year introductory period as standard. HSBC, Emirates NBD, ADCB, FAB, NBF, DIB, and ADIB all offer 1-year fixed intro periods. Some smaller lenders may have different minimum fix periods. Check the specific product sheet or ask your broker to confirm.
Related articles
- Best fixed rate mortgage UAE 2026: all fix lengths compared →
- Variable rate mortgage UAE 2026: when EIBOR + margin makes sense →
- Fixed vs variable mortgage UAE: which is cheaper long-term? →
- UAE mortgage refinance calculator: model the cost of switching →
- Mortgage comparison UAE: how to compare rates across 12 banks →
Find the best 1-year fixed rate you qualify for
Published rates are best-case figures. The rate offered to you depends on your salary, employer, deposit size, and credit score. Run the eligibility check to see what you can actually borrow and at what rate.