You have a mortgage that costs more than it should, often because your fixed rate is ending and the loan is about to move to a higher variable rate. So you ask your bank for a lower rate. Most of the time, the answer is no. Banks rarely cut the rate on an existing loan, because most customers never leave.

The way out is to switch banks, and that is where people get caught. The new bank re-values your property and lends only against that figure. If the value has dropped, you cover the gap.

A mortgage buyout is how you switch. A new bank pays off your existing loan, and you continue with it, usually at a lower rate or a fresh fixed period. It is not an equity release, which is borrowing extra money against your property’s value.

Below, we cover how a buyout works, step by step, and what a lower valuation means for you.

TL;DR

• Banks rarely lower your rate unless another bank has offered you a better deal.
• A buyout means a new bank pays off your loan and you continue on better terms. It is not an equity release.
• A new bank re-values your property, so a price drop can leave you a cash gap. The loan outstanding can differ from the current valuation, and the loan-to-value at that time could be 80% or 60% depending on your eligibility.
• Example: on a AED 2M loan, a fall in value to AED 2.1M leaves a gap of about AED 171,000.
• The cost is the same now or later, so move while your value holds.

How to Buy Out Your Mortgage, Step by Step

A buyout follows a fixed order. Doing the steps in sequence protects your options if a number changes along the way.

1. Check your current loan. Ask your bank for a settlement statement. It shows your outstanding balance, current rate, remaining term, the date your fixed period ends, and the early settlement fee.
2. Get pre-approved and compare offers. Start about 6 months before your fixed period ends. Ask two or three banks for pre-approval so you can compare rate, fixed period and fees side by side. Your current bank usually only tries to keep you once another bank has pre-approved you, so a written offer is also your best tool for asking it to match.

3. Get the property valued. The new bank sends its own RERA-registered valuer, and you usually pay the fee. The report is valid for about 30 days, and the bank lends against this figure, not against what you paid.

4. Receive the liability letter and final offer. Your current bank issues a liability letter with the exact amount needed to close your loan. It is typically valid for 15 to 30 days. The new bank then issues its final offer, and you sign.

5. Settle and register. The new bank pays off your old loan directly, and your current bank issues a no-objection letter. The mortgage is then registered at the Dubai Land Department (DLD) in the new bank’s name, and your title deed is updated.

How Long It Takes and What You Need

Expect about 3 to 6 weeks from application to registration. The slowest part is usually the liability letter from your current bank. Self-employed borrowers and non-residents should allow 6 to 10 weeks.

Have these ready:

• Emirates ID, passport and visa
• Income proof: salary certificate and 3 to 6 months of bank statements (self-employed: trade licence and company statements)
• Title deed (or Oqood details for off-plan)
• Your current mortgage statement and offer letter
• The liability letter from your current bank

What a Buyout Costs

Cost	Typical amount
Early settlement fee (current bank)	Lower of 1% of the balance or AED 10,000
Property valuation	AED 2,500 to 3,500
Mortgage registration (DLD)	0.25% of the new loan, plus a small fixed fee
Trustee office	About AED 4,000 plus VAT
Bank processing fee (new bank)	0% to 1% of the new loan, often waived

The 4% DLD transfer fee does not apply, because ownership does not change.

To see whether a buyout pays off, divide your total switching costs by your monthly saving. The result is your break-even point in months. If you plan to keep the property and loan longer than that, the switch is worth it.

A Buyout in Numbers: AED 2M Loan, Three Years In

Here is how a buyout plays out for one borrower. You took a AED 2M loan over 25 years at 3.99%, fixed for 3 years. Your EMI (monthly instalment) is about AED 10,545. The property was worth AED 2.4M when you bought it.

Three years in, you have repaid about AED 148,700 of the loan, so you still owe about AED 1.85M. Your fixed period is ending, so you ask a new bank to take over the loan. The new bank re-values the property and finds the market has softened to AED 2.1M.

The new bank lends 80% of the valuation. This is the standard limit for a resident buying a first home under AED 5M. Your own limit could be lower, such as 60%, depending on your eligibility.

Item	Amount
Loan outstanding with your current bank	About AED 1,850,000
Current valuation	AED 2,100,000
Loan the new bank approves (80% of valuation)	AED 1,680,000
Cash gap you pay at settlement	About AED 171,000

You owe AED 1.85M but the new bank lends AED 1.68M, so you pay the difference in cash.

You do not have to switch, but staying has a cost too. At the end of the fixed period your loan reverts to a variable rate: the bank’s margin plus 3-month EIBOR, the rate UAE banks charge each other for short-term loans. In this example that is 5.81% (a 1.79% margin plus 4.02% EIBOR). Your EMI would rise to about AED 12,654, which is about AED 2,100 more every month.

When Does a Buyout Make Sense, and Why Timing Matters

A buyout can cost you cash up front, and staying put can cost you more every month. Which one wins depends on your situation, so here is how to tell.

When a Buyout Is Worth It

A buyout tends to pay off when most of these are true:

• Your fixed period is ending, and the rate you would move to is well above what banks offer on fresh fixed deals. Over the last three years, fixed rates have ranged from about 3.99% to 4.99%. A variable rate today sits at about 5.8% to 6.2%, with EIBOR at around 4.1%.
• Rates are high and still moving up, so locking in a new fixed period now protects your EMI from further increases.
• Your balance is large enough. Switching costs are mostly fixed, so the bigger the loan, the faster a small rate gap covers them.
• Your property value is holding. The new bank can only lend against its own valuation, so check recent sales in your building or area for a rough idea before you apply.

When It Usually Isn’t

• A short remaining term or a small balance. The costs can take years to recover.
• You may sell soon. You could leave before you break even.
• The value has fallen a lot. The cash gap may outweigh the saving.
• The new offer isn’t really cheaper. A lower headline rate can be cancelled out by high fees, a shorter fixed period, or a higher margin after it ends.

Why Timing Matters

A buyout costs the same today as it will in two years. The early settlement fee, valuation and registration do not get cheaper by waiting. What changes is the market, and both rates and property values can move against you. If your value supports the loan today, moving now locks that in.

A buyout also lets you extend your fixed period for the next three years. That gives you a steady EMI while rates and property values settle, instead of riding the variable rate in the meantime.

Starting about six months ahead gives you time to compare written offers and check your value before the fixed period ends. If your value has already fallen, plan for the cash gap now rather than meeting it on the last day.

How MyMortgage Helps

Doing a buyout on your own means approaching banks one by one and finding out the real cost late. MyMortgage helps you see the full picture before you commit.

• Compare offers across banks. See buyout offers side by side, including fees and not only the headline rate. MyMortgage also helps you work out your break-even, so you know how long it takes to recover the switching costs.
• Get a pre-approval early. It shows what a new bank will offer you and gives you a written offer to take to your current bank.
• Get guided through valuation and paperwork. MyMortgage walks you through the valuation and the documents, including the liability letter from your current bank, so you aren’t chasing each step alone.

If your fixed period is coming up, a pre-approval check is a low-pressure place to start. Check your buyout options with MyMortgage before your rate changes.

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