Switching your mortgage in the UAE: comparing the real cost of a balance transfer

Many homeowners consider moving their mortgage to another bank when their introductory or fixed period ends, or when a different lender offers a lower rate. A switch can save money, but the headline rate is only part of the calculation. Settlement fees, registration charges and the new lender’s own costs all count.

This article explains the fees that apply in the UAE, and a simple break-even test you can run before you commit. For a general overview of refinancing, see our refinancing service.

The early settlement fee cap

Your current bank may charge a fee for settling your loan early, or for a partial settlement. For home loans the Central Bank caps this fee at 1% of the outstanding balance or AED 10,000, whichever is less. The cap appears in Appendix 2 of Regulation 29/2011 on fees charged to retail customers, and the same limit applies to partial settlement.

Because the cap is the lower of two figures, the fee on a large balance is usually AED 10,000. On a balance of AED 1.2 million, 1% would be AED 12,000, so the AED 10,000 limit applies. Check your loan’s fee schedule: banks must disclose their charges, and the fee can be lower than the cap.

The Dubai Land Department mortgage fee

When a mortgage is registered on a property, or transferred from one lender to another, the Dubai Land Department charges 0.25% of the mortgage value. The DLD mortgage transfer service describes the same 0.25% fee for an ordinary mortgage. On a new loan of AED 1.2 million, that is AED 3,000, plus any administrative charges shown on the DLD service page at the time you apply.

A simple break-even test

Work out the one-off costs of switching and divide them by the monthly saving. The result is the number of months you need to keep the new loan before the switch has paid for itself.

1. 1
   Add the one-off costs

   The settlement fee at your current bank, the 0.25% DLD mortgage fee on the new loan, and any valuation, arrangement or legal charges the new lender requires.

2. 2
   Calculate the monthly saving

   Compare the monthly payment on your current loan with the payment on the new one, using the same balance and remaining term.

3. 3
   Divide the costs by the saving

   If the answer is 24 months and you expect to sell or refinance in 18, the switch does not pay off on those assumptions.

Timing the switch

The end of a fixed or introductory period is often the most sensible time to review, because the rate may rise to a standard level. Start several months early. A new lender needs time to value the property, approve the application, and coordinate with your current bank.

If your income or debts have changed, check the new lender’s debt burden ratio first. The same 50% limit and stress test apply to a switch as to a new purchase, as explained in our debt burden article.

Sources

• Central Bank of the UAE Rulebook, Appendix No. (2), maximum fees for retail customers, including the home-loan early settlement and partial settlement cap of 1% or AED 10,000.
• Dubai Land Department, Mortgage transfer application and Mortgage registration application, 0.25% of the mortgage value.
• Checked against the sources below on 27 October 2026. The AED 1.2 million example is illustrative.