Refinancing your mortgage in Dubai — or transferring your balance to a new lender — can meaningfully reduce your monthly outgoings and total interest paid. But refinancing only makes sense when the savings outweigh the switching costs. This guide helps you calculate both.
When does refinancing make sense?
The most common trigger for refinancing is a rate reduction — either because market rates have fallen since you took your original loan, or because your financial profile has improved (higher income, lower liabilities, property appreciation increasing your equity).
Other valid reasons include: switching from a variable to a fixed product for stability, extending the loan tenure to reduce monthly repayments, or consolidating multiple property loans. Refinancing is also commonly used when an introductory fixed-rate period ends and the revert rate is higher than what new lenders are offering.
A general rule: if you can reduce your effective rate by 0.5% or more, the savings are usually worth the effort of switching — but the calculation depends on your outstanding balance, remaining tenure, and the costs involved.
How to calculate your break-even point
Switching lenders involves costs: your existing bank may charge an early settlement fee (typically 1% of the outstanding balance, capped at AED 10,000), and the new lender will charge an arrangement fee (0.5–1%), a valuation fee, and registration charges at the DLD.
To calculate your break-even: divide the total switching cost by your monthly saving. The result is the number of months until refinancing starts generating net benefit. If your break-even point is 18 months and you plan to hold the property for 5+ years, the case for refinancing is strong. If you plan to sell within 12 months, it likely is not worth it.
The refinance process in Dubai
- Request a liability letter from your current bank showing the outstanding balance and early settlement fee.
- Compare new lender offers using your outstanding balance, remaining tenure, and income documents.
- Submit a full application to the preferred new lender. The new bank will conduct a fresh valuation of your property.
- Receive the new offer letter and review all terms — rate, fee structure, and tenure — before signing.
- Complete the balance transfer at the DLD. The new bank pays off your existing loan, and the mortgage charge is transferred to the new lender.
The entire process typically takes 3–8 weeks depending on valuation timelines and lender processing speed. Working with a broker ensures you compare multiple options in parallel rather than sequentially, saving time and improving your negotiating position.