Refinancing a Dubai mortgage

How long does it take to break even refinancing a Dubai mortgage?

The term is held at twenty-five years on both sides, so every bar is the rate and nothing else. Only the move of 1.5 points comes back inside two years. The 0.25 point move takes 126.1 months, which is to say it never happens: the fixed period expires first and the question becomes a different one.

The rule

Every page on this query gives you the same sentence and then a form to fill in. The sentence is that the early settlement fee is one per cent of the outstanding balance or AED 10,000, whichever is less. It is true, it is the right figure, and it is a little over half of what switching a mortgage in Dubai actually costs.

The missing half is not hidden. It is in the Land Department's own fee schedule, and it is there because moving a mortgage from one bank to another is two registrations: the mortgage that exists has to be discharged, and the mortgage that replaces it has to be registered. Both are priced in Executive Council Resolution No. (30) of 2013, each has its own trustee, and on the illustrative loan they come to nearly as much as the bank's capped charges do.

The fee the regulation actually sets, and the right it comes with

The one per cent is not a penalty the bank chose. It is the ceiling on something the consumer lending regulations give the borrower: Any borrower may transfer his loan / finance from any bank or finance company operating in the UAE, Article 20(2) says, against paying of an early payment fee not exceeding 1% of the outstanding balance of the loan or AED 10,000, whichever is less. The fee is the price of exercising a right, not permission to leave. That is worth knowing in the conversation where a relationship manager explains why moving is difficult.

The fee table itself sits in Appendix 2 of the same regulations, as amended with effect from 8 October 2019. The home loan block caps early settlement at "Max 1% of outstanding balance or 10,000, whichever is less", the liability letter at AED 85, the clearance letter at AED 95 and the bank's own no objection certificate at AED 150. The Amendment says in terms that these "represent the maximum permissible charges" and that they are "exclusive of UAE VAT charges", so five per cent may be added to each and is shown as its own line below rather than folded into the figures.

Because the cap is the lower of a rate and a flat ceiling, it stops behaving like a percentage at a balance this site derives rather than asserts: AED 1,000,000. Below that the charge is one per cent. Above it the charge is AED 10,000 and does not move again, so it falls as a share of the loan.

The fee borrowers worry about most is regressive. The larger the mortgage, the less it costs to leave it, and at AED 5,000,000 outstanding the charge is a fifth of one per cent.

The half nobody prints: two registrations, not one

There is no transfer service that avoids this. The Schedule to Executive Council Resolution No. (30) of 2013 prices "Transferring a mortgage" at 0.25% of the mortgage (debt) value, the identical rate it charges for registering one, and "Discharging a mortgage" at AED 1,000.00. Asking for a transfer rather than a new mortgage changes the paperwork and not the fee.

So the switching stack has three parts, and the illustrative borrower is the buyer of the net rental yield page at the loan the mortgage capacity page qualifies them for: the same one bedroom at AED 1,500,000, with AED 1,125,000 outstanding, on a twenty-five year term.

The bank's capped charges are 55.0% of that and the Land Department's two registrations are 45.0%. The fee every competing page writes about is the only part of the bill that has a ceiling, and the part with no ceiling is the part nobody mentions.

Two figures are deliberately absent. Appendix 2 publishes no cap on a mortgage arrangement or processing fee, and none on the bank's valuation fee. This site holds no dataset for either, so neither is estimated, and the AED 19,715 is a floor on the cost of switching rather than a prediction of it. Ask the new bank for both in writing before the valuation is instructed, in the same way the selling well page says to ask the developer for its no objection certificate fee.

What the rate has to move to pay for it

With the switching cost known, the break-even is arithmetic. The term is held at twenty-five years on both sides, because a refinance that also resets the term produces a smaller payment out of a longer amortisation rather than a cheaper rate, and a reader cannot tell the two apart from the payment alone.

The half point every broker page recommends switching for takes sixty-one months to repay. That is longer than a great many Dubai owners hold the property at all, and a sale inside that window pays the switching cost and collects none of the saving. A quarter point takes over ten years, which is to say it never happens: the fixed period will have expired and the question will be a different one.

Turned around, the gap a given horizon needs:

From five per cent you need 2.70 percentage points to recover the switch inside a year and 1.30 points inside two. At every rate in the table the gap that pays for itself inside a year is nearer three points than one. Half a point only works if you are confident of five more years in the same property and the same loan. Those numbers are solved rather than looked up, by the same bisection the mortgage capacity page uses for its crossover rate, because a figure this page's whole argument rests on should be derived.

What this does not settle

Switching is one of three things you can do with a loan that has become expensive, and it is not obviously the best. Paying the balance down instead avoids the entire AED 19,715 and earns the same rate risk-free, which is the comparison the order of debt repayment page makes; the partial settlement charge is capped by the same Appendix 2 row and on the same terms. Selling resets everything, and the exit stack there is a different and larger set of numbers, itemised on selling well and added into the whole round trip. And if the question behind the refinance is really whether owning was the right call, that is the rent or buy break-even, where half a point of mortgage rate moves the answer by six years.

The one thing the arithmetic here does settle is that the cost of moving a Dubai mortgage is knowable to the dirham before anyone runs a credit check, because every line of it except two is published by the Central Bank or the Land Department. Ask for those two in writing, add them to AED 19,715, and divide by the monthly saving. If the answer is longer than you intend to own the flat, the better rate is not a better deal.

The arithmetic

Where it breaks

• Reading the one per cent as the fee. It is a ceiling, and the ceiling is the lower of one per cent and AED 10,000, so above a million outstanding the charge stops responding to the balance at all. Every competing page prints the one per cent and stops there.
• Treating the ceiling as the price. Appendix 2 is a table of maximum permissible charges, not a tariff. A bank may charge less, and the only way to find out is to ask for the schedule of fees Article 4 of the mortgage regulations already entitles you to.
• Forgetting the registration. Discharging the old mortgage and registering the new one are two separate Land Department transactions with their own published fees and their own trustee, and together they are the larger half of the bill on the illustrative loan. No competing page on this query mentions either.
• Refinancing for half a point. On a twenty-five year term at this balance that is a five year payback, which is longer than many owners hold the property, and the sale resets the question anyway.
• Resetting the term along with the rate. A new twenty-five years at a lower rate produces a smaller payment even when the rate has not moved enough to justify switching, and the saving it shows is amortisation rather than interest. Every figure here holds the term constant for that reason.
• Assuming the arrangement and valuation fees are capped. Appendix 2 publishes no maximum for either, this site holds no dataset for them, and they are therefore excluded from the total, which makes the total a floor rather than an estimate.
• Switching on the headline rate. A fixed period that expires back onto a variable margin is a different product from the one advertised, and the comparison that matters is over the years you intend to hold rather than over the fixed period.
• This is general information and not financial or legal advice.

When to use it

When a bank or broker offers to move your mortgage, before you agree to a valuation. Also at the end of any fixed period, because the rate you revert to is the rate the arithmetic below should be run against rather than the one you originally signed.

Sources

1. Central Bank of the UAE, Regulations Regarding Bank Loans & Other Services Offered to Individual Customers, Article 20(2), as added by the amendment of page (14), Circular No. 2705/2012
2. Central Bank of the UAE, Amendments to Appendix 2 of the Regulations Regarding Bank Loans & Other Services Offered to Individual Customers (Regulation No. 29/2011), in force 8 October 2019
3. Executive Council Resolution No. (30) of 2013 Approving Fees of the Land Department, Schedule
4. Dubai Land Department, Mortgage release application, service fees
5. Dubai Land Department, Mortgage registration application, service fees
6. Federal Decree-Law No. (8) of 2017 on Value Added Tax, Article 3

Last reviewed 15 October 2026. Commercial relationship disclosure: the author works in Dubai real estate brokerage. See the disclosure standards. Disclosure standards.