How much can I be charged to refinance to another bank?

A move to another bank has two kinds of cost. The first is what your current bank charges to let you go. On a conventional home loan the Central Bank caps the early settlement fee at 1 percent of the outstanding balance or AED 10,000, whichever is less, before VAT. Article 4 of the circular sets the maximum charges to refinance as "the actual cost (to break fixed loans) to the lender and/or fees and charges as set out in Regulations No. 29/2011", so on a fixed rate your contract may allow a break cost on top, and it says there should be "no impediment for borrowers to refinance with other institutions".

The second is the Land Department's mortgage transfer service: 0.25 percent of the loan, the DLD service fee of AED 580, and a service partner fee of AED 4,000 plus VAT at a trustee office. Your settlement letter and the new bank's offer give the rest.

Whether a move pays depends on those costs against the saving over the remaining term, and the honest answer is that it often does not, particularly early in a fixed period. We say no to buyout enquiries regularly for exactly this reason.

The comparison people most often get wrong is stretching the term. Moving to a longer term lowers the monthly payment and can look like a saving while costing more in total. A buyout is worth doing when the total cost over the remaining term falls, not when the monthly figure does.

If you want that arithmetic done properly on your own mortgage, including the follow on margin at the new bank, ask us. It takes one conversation and the answer is sometimes to stay where you are.

The settlement cap is Regulation 29/2011 Appendix 2, before VAT; a fixed rate break cost depends on your contract. The transfer fees are the Dubai Land Department mortgage transfer service; AED 580 is the fixed DLD service fee as confirmed by The Lending Tree.