Offset Mortgage in the UAE: A Smart Way to Save on Interest

If you’re searching for a way to save money on your home loan in the UAE, you may have come across the term offset mortgage.

But what exactly is an offset mortgage, and how does it work?

In this guide, we’ll break it down in simple terms, show you how it compares to other mortgage types, and explain why it might be a smart financial move — especially if you have savings.

What Is an Offset Mortgage?

An offset mortgage links your home loan with a savings or current account. Instead of earning interest on your savings, the bank uses the balance to “offset” your loan — meaning they only charge you interest on the difference.

Example

• – Mortgage loan: AED 1,000,000
  
  
• – Savings: AED 200,000
  
  
• – You only pay interest on AED 800,000
  
  

This helps reduce the total interest you pay over time — and can also shorten the mortgage term.

How Does an Offset Mortgage Work in the UAE?

n the UAE, a few select banks offer offset mortgage products designed for residents with active savings accounts.

Key Features:

• – Savings account and mortgage are linked
  
  
• – You can access your savings anytime
  
  
• – No interest is earned on savings, but you save on mortgage interest
  
  
• – The more money you hold in the account, the less interest you pay
  
  

Your monthly mortgage payment typically stays the same, but more of your payment goes toward the loan principal rather than interest — helping you repay your loan faster.

What Are the Benefits of an Offset Mortgage?

There are several reasons why an offset mortgage might be a great fit for you, especially if you’re a UAE resident with cash reserves.

 1. Save on Interest

This is the biggest benefit. By reducing the interest-charged portion of your loan, you could save tens of thousands of dirhams over the life of your mortgage.

2. Pay Off Your Mortgage Faster

Since more of your monthly payment goes toward the principal (not interest), you can become debt-free years earlier than with a standard mortgage.

3. Flexibility With Your Savings

You don’t lose access to your money. You can withdraw your funds whenever needed — the bank just stops offsetting your loan by that amount until you return the funds.

4. Tax-Efficient (For Non-UAE Residents)

If you’re an expat with overseas income or taxed interest back home, an offset mortgage lets your savings work without generating taxable income, as you’re not earning interest — you’re saving it.

Offset Mortgage vs Fixed and Variable Mortgages

Let’s compare:

Feature	Offset Mortgage	Fixed Mortgage	Variable Mortgage
Interest Rate	Higher than fixed/variable	Fixed for 1–5 years	Follows EIBOR rate
Savings Impact	Lowers interest	No impact	No impact
Access to Savings	Yes	N/A	N/A
Early Repayment Benefit	Yes	Yes (with fee)	Yes (with fee)
Best For	Savers with cash reserves	Budget-focused borrowers	Rate-sensitive borrowers

Is an Offset Mortgage Right for You?

This type of mortgage works best if:

• – You have significant savings (AED 100K+)
  
  
• – You prefer flexibility over fixed repayment terms
  
  
• – You want to reduce interest instead of earning on deposits
  
  
• – You’re a long-term investor or homeowner in the UAE
  
  

 Tip: If your savings are small or you plan to use them soon, a fixed-rate mortgage might suit you better.

 How Much Can You Save With an Offset Mortgage?

Let’s run an example:

 Property Value: AED 1,200,000

• – Mortgage Amount: AED 960,000 (80%)
  
  
• – Interest Rate: 4.25%
  
  
• – Term: 25 years
  
  
• – Savings in Offset Account: AED 200,000
  
  

Total Interest Without Offset: AED 608,000

 Total Interest With Offset: AED 472,000

 –You save: AED 136,000 in interest
  Plus, you repay the mortgage roughly 2.5 years earlier

Note: Actual results vary by lender and savings behavior.

 Which UAE Banks Offer Offset Mortgages?

Currently, only a few UAE lenders offer this structure. Availability may vary depending on the market.

Banks may also refer to this product under names like:

• – Smart Home Loan
  
  
• – Link Mortgage
  
  
• – Interest Saver Home Loan
  
  

Mortgage Finder can help you find the most competitive offset mortgage options and compare them to other products.

Offset Mortgage FAQs

Q: Do I still need to make monthly mortgage payments?

Yes — your monthly repayment continues as usual. The savings only reduce the interest charged, not the need to pay.

Q: Can I still access my savings if I need them?

Absolutely. You can withdraw or deposit funds at any time. Just remember: the offset only applies to the balance available.

Q: Will I earn interest on my savings?

No — your savings won’t earn interest. Instead, they help you avoid paying interest on your loan.

Q: Is it available for expats?

Yes! Offset mortgages are available for both residents and non-residents, depending on the bank.

An offset mortgage is a smart financial tool that can help UAE property buyers reduce interest payments, gain more control over their loan, and pay off their mortgage sooner.

It’s especially ideal for those with steady income and cash savings — making your money work harder without locking it away.

Wondering if an offset mortgage is right for you?
Speak to a Mortgage Finder advisor today. We’ll help you compare all your mortgage options — including offset plans — and show you how much you could save.