Rates
How much does a 0.25% rate difference cost me?
On a AED 2,000,000 mortgage over 25 years, a rate difference of 0.25% (3.89% vs 4.14%) changes your monthly payment by around AED 276 and adds roughly AED 82,893 in total interest across the full term. Even small rate differences compound significantly over a 25-year mortgage, which is why comparing lenders is worthwhile.
A worked example
Take an indicative AED 2,000,000 mortgage over a 25-year term. Comparing a 3.89% rate against a 4.14% rate (a 0.25% gap) shows how much a seemingly small difference adds up over the life of the loan, using standard reducing-balance amortisation.
| Rate | Monthly payment | Total interest over 25 years |
|---|---|---|
| 3.89% | AED 10,436 | AED 1,130,693 |
| 4.14% | AED 10,712 | AED 1,213,586 |
| Difference | AED 276 / month | AED 82,893 total |
Why the gap grows over time
Interest is charged on a reducing balance, so a higher rate means slower principal repayment early on, which compounds across the full term. The AED 82,893 difference in this example is larger than many buyers expect from what looks like a small percentage gap, and it's roughly 4 years of extra monthly payments' worth of pure interest.
How the gap scales with loan size
- On a AED 1,000,000 loan, the same 0.25% gap costs roughly half as much in total interest
- On a AED 3,000,000 loan, it costs roughly 1.5 times as much
- The monthly payment difference scales proportionally with loan size too
How to close the gap
Comparing offers across banks, rather than accepting the first quote, is the most direct way to avoid overpaying by a margin like this. Use an affordability calculator alongside rate comparison to see the full picture, and check today's indicative best rate before applying.
Run the numbers on your own case
Free Lenddoo tools and guides related to this article.
Last reviewed 17 July 2026