If your fixed rate has ended or rates have changed, moving your mortgage to another bank could lower your monthly payment. Here is how a buyout works and what it costs.
Key takeaways
- A buyout moves your existing mortgage to a new bank with better terms.
- Early settlement fees are capped at 1 percent of the outstanding balance or AED 10,000, whichever is lower.
- The best time to review is when a fixed period ends.
- Equity release may be possible if the property value has increased.
What is a mortgage buyout?
A mortgage buyout, also called a balance transfer or refinance, is when a new bank pays off your existing mortgage and you continue repaying the new lender, ideally at a lower rate or on better terms. It is one of the simplest ways for Dubai homeowners to reduce their monthly repayment.
When does switching make sense?
- Your fixed rate period has ended and you have moved to a higher variable rate.
- Market rates or bank margins are now lower than what you pay.
- You want to switch from variable to fixed, or the reverse.
- You want to release equity for renovation or investment.
- You want to move from a conventional to an Islamic structure.
What does a buyout cost?
| Cost | Typical amount |
|---|---|
| Early settlement fee (current bank) | Capped at 1% of outstanding or AED 10,000, whichever is lower |
| Mortgage registration (DLD) | 0.25% of the new loan plus admin fees |
| Valuation fee | Around AED 2,500 to 3,500 plus VAT |
| New bank processing fee | Up to 1% of the loan, sometimes waived |
Some banks offer to cover part of the switching costs. We calculate the break even point so you can see exactly how many months it takes for the savings to cover the costs.
How the process works
- Request a liability letter from your current bank showing the outstanding balance.
- We compare buyout offers across the market.
- The new bank values your property and issues an offer.
- The new bank settles your old loan with a manager’s cheque.
- The old mortgage is released and the new one is registered with the Dubai Land Department.
A typical buyout takes around three to five weeks from application to completion.
An example of the savings
Consider a homeowner with AED 1.2 million outstanding over 20 years. Moving from 5.5 percent to 4.5 percent reduces the monthly repayment by roughly AED 700, or more than AED 8,000 a year, before costs. Every case is different, which is why we run the numbers on your actual balance.
Find out if you could save
Send us your current rate and balance and we will tell you whether a buyout is worth it.
Frequently asked questions
Can I refinance during my fixed rate period?
Yes, but you will usually pay the early settlement fee. The cap under UAE rules is 1 percent of the outstanding balance or AED 10,000, whichever is lower.
Can I release equity from my Dubai home?
Yes, some banks allow equity release, subject to loan to value limits and affordability.
How often should I review my mortgage?
A good habit is to review at the end of every fixed period, or whenever rates move significantly.