The monthly instalment your UAE mortgage calculator shows is the easy part. The hidden part is how much of that instalment is principal versus interest in year one.
The monthly instalment is the fixed payment due each month on the mortgage, combining principal repayment and interest. On a standard 25-year term, the first few years are heavily interest-weighted: on an AED 1.2M loan at 5.0%, year-one instalments are approximately AED 7,015 per month — of which roughly AED 4,970 is interest in month one, falling to AED 4,890 by month twelve. Principal repaid in the first year is roughly AED 25,000, or 2% of the balance.
What that means: leveraged buyers in Dubai who plan to sell inside three to five years are building almost no equity through principal repayment. The equity gain, if it comes, has to come from appreciation. Mortgage amortisation won’t rescue the returns.
A client last year was surprised to see that after four years of AED 8,000/month instalments on an AED 1.4M loan, only AED 135k had gone to principal. The rest was interest.
Run an amortisation schedule before you sign. Year-by-year split. Know what you’re actually repaying.
Related: Mortgage, Interest Rate, Financing Cost, Equity.
Run the numbers on a real Dubai unit
Yield calculators only help if they run on realistic cost inputs. Our team maintains live inventory across Dubai, RAK, and Abu Dhabi — including the kind of data most brochures don’t volunteer. Request a live pricing sheet or browse available units.
