Refinancing a mortgage in the UAE: the four structures

When each structure applies

A straight buyout is the right call when the goal is purely the rate or the term — nothing is drawn, the file is short, and most banks charge no processing fee on it at all. A buyout with equity is right when the loan was moving anyway and the equity has a job to do: doing both in one transaction saves a second valuation, a second registration and a second application.

Commercial properties also qualify for releasing equity and refinancing

Whether the asset is booked under a business name or held under a person's name. The structure, bank appetite and documentation set may differ from a standard residential switch, but the principle is the same: an existing facility can be settled and replaced where the transaction, borrower profile and property fit the lender's commercial policy.

What it costs to refinance a mortgage in Dubai

The Dubai Land Department’s 4% transfer fee does not apply to a refinance, because ownership does not change. What remains is a short list of transaction costs — and most of them are either settled by the incoming bank as part of the buyout or refunded by it on completion.

Why the 4% transfer fee does not apply

The 4% transfer fee is levied on a change of ownership. In a refinance the title does not move; only the lien against it changes. On a AED 3m property that is AED 120,000 you are not spending, and it is the structural reason switching costs a fraction of what selling and rebuying costs.

The full fee schedule, itemised

Most published cost tables in this market carry five or six lines and stop. Here is the complete list, with the part that matters most — who actually settles each one.

A note on that last row, because it appears in most competitor cost tables as though it were standard. An NOC is a sale-transaction document. On a straightforward refinance where ownership does not change, it is usually not required at all.

What you pay, and what the incoming bank settles

The number you write a cheque for is roughly half what a total-cost table implies.

The distinction matters. The settlement fee is carried by the incoming bank inside the new facility rather than drawn from your account.

Fee refunds as a switching incentive

WORTH MORE THAN A QUARTER OF A POINT
Several banks refund the early settlement and valuation fees outright to win a buyout. On a AED 1.5m balance that package is worth around AED 13,400 — materially more than a quarter of a point on the headline rate over the same period. It is not advertised consistently and it moves campaign to campaign, which is why we compare offers on the refund package alongside the rate and the follow-on margin.

Refinance a home loan in the UAE: what the numbers look like

A one-point rate improvement on a AED 1.5m balance is worth roughly AED 810 a month and close to AED 9,700 in the first year. Set against what you put up at the counter, the first year’s saving covers it — and where the fees are refunded, the position is positive from the outset.

A worked example on a AED 1.5m balance

An expatriate resident, AED 1,500,000 outstanding, twenty years remaining, currently on a variable rate of 4.99%. The offer is 3.99% fixed for three years, reverting to EIBOR plus 1.99%.

The first year’s saving covers what you put up. Where the fees are refunded, you are ahead from the outset.

The margin above EIBOR is the number that decides the next five years

At month thirty-seven the rate reverts to EIBOR plus 1.99%. That margin — not the fixed rate — is what you pay for most of the life of the loan, because the fix is three years and the mortgage is twenty. A 3.99% fix reverting at plus 1.99% and a 4.25% fix reverting at plus 1.25% look a quarter-point apart on the headline; across the full remaining term the second is frequently the stronger position.

Fixed or variable at the point of switching

A fixed rate buys certainty for a defined period. A variable rate tracks EIBOR plus a margin and rewards you directly when EIBOR falls. The practical answer for most borrowers switching is a fix long enough to cover the period they can actually plan for, with the best follow-on margin available behind it.

A shorter term instead of a lower payment

Refinancing is also the natural moment to shorten the term. Moving a twenty-year remaining term to fifteen at the better rate raises the monthly instalment but reduces total interest substantially and builds equity faster — worth modelling alongside the payment reduction rather than instead of it. See amortisation.

Do you qualify? What the bank checks on a refinance loan in the UAE

A refinance is a new mortgage application, assessed on your current income and liabilities. Your Debt Burden Ratio — the share of monthly income committed to debt — must come in at or under 50%. Unused credit card limits count towards it, which is the one thing most applicants can improve before applying.

How the Debt Burden Ratio is assessed

The Debt Burden Ratio totals your monthly commitments and divides them by your monthly income. The Central Bank caps it at 50%. What catches people out is not the cap — it is how limits are counted.

Applicant B has not borrowed a dirham more. They hold AED 250,000 of limits they are not using.

Reducing unused credit limits before you apply

Most banks count 5% of a credit card or overdraft limit as a monthly commitment whether or not anything is drawn on it. Reducing limits you do not use takes about two weeks, costs nothing, and is the highest-return preparation available before a refinance. Where the ratio is still tight, the other levers are extending the term, adding a co-borrower on a joint application, or paying down the balance before applying. Run your position through the eligibility calculator first.

Salary transfer and non-salary-transfer options

Banks price a mortgage differently depending on whether your salary is credited to them. A salary-transfer facility generally carries the better rate; a non-salary-transfer facility carries a premium but leaves your banking arrangements where they are. On a switch this is a live choice rather than a given, because you are selecting a new bank anyway.

Rental income in the assessment

Where you hold rented property, that income can be brought into the calculation with the title deed, Ejari, cheque copies and statements showing rent received. For owners whose income is principally rental, a lease rental discounting facility reads the rent roll directly — see investment property finance.

Islamic refinance and buyout

The same transaction is available on a Sharia-compliant basis, structured as Ijara or Murabaha rather than as an interest-bearing loan. The mechanics at the trustee office are identical; the pricing is expressed as a profit rate. See Islamic finance solutions.

How to switch your mortgage to another bank in the UAE

A resident switch runs to around 30 to 45 days from first conversation to registration. There are six stages, and the one that sets the pace is the settlement of your existing loan — coordinated between two banks, the Land Department and the trustee office.

The documents you need

–   Title deed, most recent copy

–   Latest mortgage statement, or a screenshot of the remaining balance

–   Passport, UAE residence visa and Emirates ID

–   Salary certificate dated within the month, addressed to the bank

–   Six months of bank statements

–   Payslips, and a recent DEWA bill for proof of address

–   Where rental income is counted: title deed, Ejari, cheque copies and statements showing rent received

–   Self-employed applicants: trade license, MOA, company statements and audited accounts where available

Items one and two are the only extras a buyout needs. Everything else is a standard mortgage file, and submitting it complete at this stage is what holds the whole thing at the shorter end of the range.

What happens at the trustee office

The final stage runs through a registration trustee office rather than the Land Department directly. Both banks are represented. Your existing bank’s lien is released and the incoming bank’s lien registered against the title, usually within the same appointment, and the settlement is exchanged on the day.

Switching as a non-resident

Non-resident switching is arranged as standard, generally with a power of attorney and the property owner to visit the UAE at least once, on a defined panel of banks with their own loan-to-value positions. See non-resident mortgages.

Mortgage buyout in the UAE: how the settlement works

A mortgage buyout is the same transaction described from the lender’s side. The incoming bank buys out and settles your existing loan, including the early settlement fee, and registers its own lien against the property. Buyout and refinance are used interchangeably in this market.

The liability letter

Your existing bank issues a liability letter stating the exact figure required to close the loan on a given date — principal, accrued profit and the early settlement fee. That letter is the pivot of the whole transaction: it is what the incoming bank pays against, and it carries an expiry date. Coordinating the Final Offer, the liability letter and the trustee appointment inside that window is what keeps a buyout at 30 to 45 days.

Why the settlement fee is not a cheque you write

Your new facility is written at the balance being settled, so the early settlement fee is carried within the new loan rather than drawn from your account. The incoming bank pays the liability letter figure in full. You pay registration, trustee and the Land Department lines — and where a refund package applies, you recover the settlement and valuation fees afterwards.

The early settlement fee, and where it differs

For a retail mortgage the fee is 1% of the outstanding balance, capped at AED 10,000 plus VAT. Business banking facilities are governed by their own terms rather than that cap, which is one of several reasons a company-booked facility is priced and compared separately.

Releasing equity while you refinance a mortgage in the UAE

If the loan is moving anyway, drawing additional funds in the same transaction saves a second valuation, a second registration and a second application. The processing fee, usually nil on a straight buyout, generally applies to the equity portion — and the purpose of the additional funds is documented.

Under a retail mortgage, released equity is approved for purchasing property in the UAE or renovating a property you own, evidenced by a contractor’s quotation or proforma invoice, or an MOU and title deed for a purchase. On a renovation, banks commonly release the funds against the schedule of works and frequently place them in your own account, so you draw down on your own timeline.

Two further routes are worth knowing about. Where the requirement is working capital or business liquidity, a facility booked in a company name is the structure that permits it. And where the income being assessed is rent rather than salary, lease rental discounting reads the property’s rental stream instead. All of it is set out here: Equity release in Dubai: how much can you actually release?

Refinance mortgage UAE: the questions we are asked most

Is it worth refinancing my mortgage in the UAE?

It is worth it when the margin above EIBOR after the fixed period is competitive and the saving is meaningful against what you put up. On a AED 1.5m balance a one-point improvement is worth around AED 810 a month — close to AED 9,700 in the first year, against roughly AED 10,200 paid at the counter.

What does it cost to refinance a mortgage in the UAE?

What you put up is around AED 10,200 on a AED 1.5m balance — registration at 0.25% plus AED 290, trustee at around AED 4,500, plus the discharge, title deed and Land Department lines. The early settlement fee is settled by the incoming bank within the buyout. The 4% transfer fee does not apply.

How much is the early settlement fee in the UAE?

For a retail mortgage, 1% of the outstanding balance capped at AED 10,000 plus VAT. It is settled by the incoming bank as part of the buyout rather than paid from your account, and several banks refund it as a switching incentive.

How long does it take to switch a mortgage to another bank in the UAE?

Around 30 to 45 days: pre-approval in five to ten working days, valuation in three to five, then settlement and registration.

Do I have to re-qualify when I refinance?

Yes. It is a new application assessed on your current income and liabilities, and your Debt Burden Ratio must come in at or under 50%. Unused credit card limits are counted at 5% of the limit.

Can I refinance and release equity at the same time?

Yes, and it is materially more efficient than doing them separately — one valuation, one registration, one application. The processing fee generally applies to the equity portion.

What is a mortgage buyout in the UAE?

The same transaction as a refinance, described from the lender’s side. The incoming bank settles your existing loan in full and registers its own lien against the property.

Should I choose the lowest fixed rate available?

Compare the whole structure. The margin above EIBOR after the fixed period is what you pay for most of the loan’s life, so a slightly higher fix with a better follow-on margin frequently costs less across five years.

Can I refinance on a Sharia-compliant basis?

Yes. The same buyout is available structured as Ijara or Murabaha. The mechanics at the trustee office are identical and the pricing is expressed as a profit rate.

Sources and references

–   Central Bank of the UAE — Regulations Regarding Mortgage Loans (loan-to-value positions, Debt Burden Ratio, tenure)

–   Central Bank of the UAE — early settlement fee cap for retail mortgage loans

–   Dubai Land Department — mortgage registration, discharge and trustee fee schedule

–   EIBOR — Emirates Interbank Offered Rate, published by the Central Bank of the UAE