What is the early settlement fee on a UAE mortgage?

The cap is in the Central Bank's schedule of maximum retail fees, set as Appendix 2 to Regulation 29/2011 and repeated in the annex to the Consumer Protection Standards: home loan early settlement fees, "Max 1% of outstanding balance or 10,000, whichever is less". The schedule states its fees exclude VAT. On a balance of AED 1,500,000, 1 percent would be AED 15,000, so the AED 10,000 limit applies, plus VAT.

Article 4 of the mortgage circular says the maximum charges for refinancing or early repayment "are the actual cost (to break fixed loans) to the lender and/or fees and charges as set out in Regulations No. 29/2011", and that there should be "no impediment for borrowers to refinance". On a fixed rate, ask what break cost your contract allows before assuming the cap is the whole bill.

The bank must tell you whether early settlement is possible and which fees apply, and your Key Facts Statement must give a worked example of the calculation. Once you settle in full, the bank may not charge interest you have not yet incurred. Islamic finance carries a further condition: early settlement fees may be imposed only in relation to the institution's actual costs, in line with the Higher Shari'ah Authority resolution.

Whether settling early pays depends on what you save over the remaining term against what you pay to leave. A specialist can read your settlement letter and run that comparison against the banks on our panel.