Finance & Mortgage · 7 min · 2026-10-23

Mortgage Buyout and Refinance in the UAE: How It Works and What It Costs

A mortgage buyout moves your loan to a new lender. The CBUAE says there should be no impediment to refinancing. Here is how to compare the costs.

A mortgage buyout (or refinance) in the UAE means a new lender pays off your existing mortgage and you repay the new lender instead, usually to obtain a different rate, term or product. The UAE Central Bank states in Article 4 of its "Regulations Regarding Mortgage Loans" (Circular 31/2013) that "there should also be no impediment for borrowers to refinance with other institutions", and caps the charges your current lender can apply. The decision comes down to one comparison: the interest you save against the costs of switching.

What the regulation protects

Article 4 gives refinancing borrowers three key protections:

• No impediment: nothing in the relationship should block you from moving to another lender.
• Capped exit charges: the maximum charges to refinance with other banks or financial institutions are the actual cost to the lender of breaking a fixed loan and/or the fees and charges set out in Regulations No. 29/2011.
• Disclosure: your current contract includes a separate fee schedule and a clear pre-payment policy, so the exit cost is knowable in advance.

The new loan is a full mortgage application. The new lender applies the same CBUAE limits: the 50% DBR with a stress test (Article 3.1), maximum LTV (Article 3.2), the 25-year maximum term (Article 3.3) and the 7x income cap for expatriates (Article 3.4).

How a buyout works

1. Get your current position: ask your lender for a liability letter showing the outstanding balance and any early settlement charge.
2. Apply to the new lender: provide income and liabilities documents as for any mortgage.
3. Valuation: the new lender commissions an independent on-site valuation (Article 2.5). Your new LTV is measured against this value.
4. Offer and contract: review the new loan documentation, total cost and fee schedule (Article 4).
5. Settlement and transfer: the new lender pays off the old loan, the old mortgage is released and the new one is registered at the Dubai Land Department.

Costs to compare

Worked example: the break-even point

Outstanding balance: AED 1,000,000 with 20 years remaining. Current example rate: 5%. New example rate: 4%.

Now assume, for illustration only, that all switching costs together come to AED 15,000. Dividing AED 15,000 by the monthly saving of about AED 540 gives a break-even point of about 28 months. If you expect to keep the loan longer than that, the switch pays for itself in this example. Your own figures will differ, so ask each lender for its fees.

When refinancing makes sense

• The rate difference is large enough to recover costs well within your holding period.
• Your fixed period has ended and the break cost is small or nil.
• You want a different product, such as moving between conventional and Islamic finance.
• Your income has changed and a different term suits you better, within the 25-year maximum.

Points to check

• Introductory rates: the stress test uses the rate that applies after the introductory period (Article 3.1). Compare the full-term cost, not only the first years.
• Age: each lender sets the maximum age at the last repayment (Article 3.3).
• Equity release: if you borrow more than the outstanding balance, the LTV limits apply to the total.

Documents for a buyout

A buyout is assessed like a new mortgage, so the new lender collects a full income and liabilities history (Article 2.2). In addition to identity and income documents, you will typically need:

• the liability letter from your current lender
• recent statements of the existing mortgage
• the title deed showing the current mortgage
• details of any other loans and credit cards

Each lender sets its exact checklist. See our guide to the documents needed for a UAE mortgage.

FAQ

Can my bank stop me from refinancing?

Article 4 says there should be no impediment to refinancing with other institutions, and caps the exit charges.

How much does a mortgage buyout cost?

It depends on your contract and the new lender. The fixed official elements are the DLD registration of 0.25% of the new loan plus admin fees; the rest is set by each lender's fee schedule.

Can I switch from a conventional mortgage to Islamic finance?

Yes, if a provider offers it. Article 6 says Shari'ah-compliant providers follow the same regulations.

Does a new valuation change my LTV?

Yes. LTV is measured against the appraised value, so a new valuation sets the new ceiling.

Next steps

Model your switch with the mortgage buyout calculator, read about early settlement and the guide to early repayment and refinancing, and check your new limit with the LTV calculator.

Calculators for this guide: Mortgage calculator Dubai & UAE · Dubai mortgage for non-residents · Off-plan calculator Dubai

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