What Is the Best Mortgage Term Length: Should You Choose a Longer or Shorter Mortgage Term?

When buying property in Dubai, one of the most important decisions you’ll face is choosing the best mortgage term length. Should you go for a longer or shorter mortgage term? The answer depends on your financial goals, monthly budget, and future plans in the UAE.

In Dubai, mortgage terms typically range from 5 years to 25 years, with 25 years being the maximum allowed by UAE Central Bank regulations. While longer terms mean lower monthly repayments, shorter terms help you save on interest. But which option is right for you? Let’s break it down.

What Does Mortgage Term Length Mean?

The mortgage term length refers to the period of time over which you repay your home loan. For example, if you choose a 20-year term, your loan repayments will be spread out over 20 years.

Key points to note:

• -In Dubai, mortgage terms can go up to 25 years, or until the borrower reaches retirement age (65 years for salaried employees, 70 years for self-employed).
  
  
• -The choice between a longer or shorter mortgage term directly affects your monthly payments and the total cost of your loan.
  
  

Longer vs. Shorter Mortgage Terms in Dubai

Here’s a clear comparison to help you decide between a longer or shorter mortgage term:

Feature	Shorter Mortgage Term	Longer Mortgage Term
Typical Duration	5 – 15 years	15 – 25 years
Monthly Payments	Higher	Lower
Total Interest Paid	Much less	Much more
Equity Build-Up	Faster	Slower
Financial Flexibility	Lower (due to higher EMIs)	Higher (more manageable EMIs)
Best For	Buyers wanting to minimize overall interest costs and pay off quickly	Buyers wanting affordable monthly installments and flexibility in budgeting

Benefits of Choosing a Shorter Mortgage Term

If you’re considering a shorter loan, here’s why it could be the best mortgage term length for you:


1.Save on Interest – With a shorter term, you’ll pay significantly less interest over the life of the loan.

2.Build Equity Faster – Since you’re paying down the principal quicker, you’ll own more of your property sooner.

3.Financial Discipline – Higher monthly payments force you to stick to a structured repayment plan.

4.Freedom from Debt – You become mortgage-free sooner, which gives you peace of mind.

•Example: For a AED 1,000,000 mortgage at a 4% interest rate:

• -10-year term = approx. AED 10,124 per month, total interest ~AED 214,880
  
  
  –25-year term = approx. AED 5,278 per month, total interest ~AED 583,400
  
  

This clearly shows how shorter terms reduce overall loan costs.

Benefits of Choosing a Longer Mortgage Term

For many expats and investors, a longer term may be the best mortgage term length. Here’s why:


1.Lower Monthly Payments – Spreading repayments over 20–25 years makes them easier to manage.

2.Improved Affordability – A longer mortgage term means you can qualify for higher loan amounts since your monthly burden is lighter.

3.Flexibility in Cash Flow – Lower installments free up money for investments, education, or business opportunities.

4.Option to Repay Early – In the UAE, many banks allow partial early repayments (up to 10–20% annually) with minimal fees.

•Example: Using the same AED 1,000,000 mortgage at 4% interest:

• 20-year term = AED 6,060 per month, total interest ~AED 454,400
  
  
• 25-year term = AED 5,278 per month, total interest ~AED 583,400
  
  

While interest costs are higher, the lower monthly payments may be better suited to your budget.

How to Decide Between a Longer or Shorter Mortgage Term

When deciding on the best mortgage term length, consider these factors:

1. Monthly Budget

• -If you can comfortably afford higher monthly installments, a shorter mortgage term saves you money.
  
  
• -If cash flow is tight, a longer mortgage term makes your repayments more manageable.
  
  

2. Financial Goals

• -Want to be debt-free quickly? Go for a shorter term.
  
  
• -Want to invest in other opportunities? Choose a longer term for better liquidity.
  
  
  

3. Future Plans in Dubai

• -If you plan to stay long-term, a longer mortgage term may suit you better.
  
  
• -If you might sell the property soon, a shorter term could reduce interest costs before selling.
  
  
  

4. Interest Rate Environment

• -With UAE interest rates fluctuating, locking into a shorter mortgage term can protect you from paying excessive interest.
  
  
• -A longer mortgage term gives more flexibility if you expect future refinancing opportunities.
  
  

Expert Tip: Balance Between the Two

Sometimes, the best mortgage term length is not strictly short or long, but somewhere in between. Many Dubai homeowners choose 15–20 years as a middle ground:

• -Payments are still manageable.
  
  
• -Total interest is significantly lower than a 25-year term.
  
  
• -You can still make early repayments if your income increases.
  
  

FAQs About Mortgage Term Length in Dubai

1. What is the maximum mortgage term in Dubai?
– Up to 25 years or until the borrower reaches retirement age.

2. Can I change from a longer to a shorter mortgage term later?
– Yes, refinancing options in Dubai allow you to adjust your mortgage term.

3. Which is better for expats – a longer or shorter mortgage term?
– It depends. Expats who want flexibility may prefer a longer mortgage term, while those aiming to reduce costs faster may choose a shorter one.

Choosing the best mortgage term length comes down to your personal finances, future plans, and risk appetite.

• -A shorter mortgage term means higher monthly payments but huge savings on interest.
  
  
• -A longer mortgage term keeps payments affordable but increases total costs.
  
  

In short, the decision of whether to take a longer or shorter mortgage term is a balancing act between affordability and total cost.

At Mortgage Finder, our experts help UAE residents and expats analyze their financial situation to determine the best mortgage term length. Whether you’re buying your first home or refinancing, we ensure you make the most informed decision.