Paying off your mortgage early — or refinancing to a better deal — can save significant interest. But early settlement carries fees, so it pays to understand the rules and run the numbers before you act.
Early settlement fees
Under UAE Central Bank rules, the early settlement fee is generally capped at 1% of the outstanding balance (subject to a maximum amount) when you settle or refinance. Partial payments may have their own terms, so check your specific mortgage contract.
When early settlement makes sense
Making partial prepayments reduces your principal and total interest, and can shorten your tenure. Full settlement makes sense when you have surplus funds and few higher-return alternatives. Refinancing makes sense when a new rate — after fees — clearly beats your current cost over your remaining holding period.
Do the break-even math
Compare the settlement or switching cost against the interest you would save. If the savings recover the fees well within your expected holding period, it is usually worth proceeding. An advisor can model this precisely for your loan.