Mortgage early settlement in the UAE costs at most 1% of the outstanding balance or AED 10,000, whichever is less: that is the cap the Central Bank of the UAE (CBUAE) sets for home loans, before VAT. The same cap applies to a partial payment, to a loan cleared from a sale and to a move to another bank, though a fixed-rate loan can add the lender's actual cost of breaking the fixed rate. Once you have paid, the Dubai Land Department (DLD) removes the mortgage from the title deed for AED 1,000 plus a title deed fee.
- The rule: CBUAE Decision No. 96/2019, in force since 8 October 2019, caps both early and partial settlement fees on home loans at 1% of the outstanding balance or AED 10,000, whichever is less, before VAT.
- Interest stops: after a full settlement the bank can't charge future interest; after a partial one it must cut the interest in line with the principal left.
- Rates now: 3-month EIBOR was 4.340% at the 30 October 2026 fixing, the CBUAE held its Base Rate at 3.90% on 28 October, and the US Federal Reserve meets next on 8–9 December 2026.
How much is the mortgage early settlement fee in the UAE?
Your bank can charge at most 1% of the outstanding balance or AED 10,000, whichever is less, plus VAT. Below AED 1 million outstanding, 1% of the balance is the ceiling; from AED 1 million up, the AED 10,000 limit applies. The cap sits in Appendix 2 of the CBUAE's Regulation No. 29/2011, as replaced by Decision No. 96/2019.
| Outstanding balance | 1% of the balance | Most the bank can charge (before VAT) |
|---|---|---|
| AED 400,000 | AED 4,000 | AED 4,000 |
| AED 750,000 | AED 7,500 | AED 7,500 |
| AED 1,000,000 | AED 10,000 | AED 10,000 |
| AED 2,000,000 | AED 20,000 | AED 10,000 |
The cap is a maximum, not a price: the CBUAE tells banks not to default to it where their costs are lower, and your loan contract must carry a fee schedule showing what your bank charges. On a fixed rate, Article 4 of the CBUAE's mortgage regulation also lets the lender recover its actual cost of breaking the fixed loan, so ask for that figure in writing first.
Can you pay off part of your mortgage, and what does it cost?
Yes. A partial settlement has the same cap as a full one: at most 1% of the outstanding balance or AED 10,000, whichever is less. Once you have paid, the CBUAE's Consumer Protection Standards require the bank to adjust the interest in proportion to the principal left, so a lump sum cuts your future interest from that point.
Ask whether the bank will lower your instalment or shorten the term. Shortening the term saves more interest; a lower instalment frees cash and eases your debt burden ratio, which the CBUAE caps at 50% of income, if you plan to borrow again.
Here is the arithmetic on an illustrative loan: AED 1,000,000 outstanding with 20 years left at 5.84%, which is the 3-month EIBOR fixing of 30 October 2026 (4.340%) plus an illustrative margin of 1.5 points. You pay AED 200,000 off.
| Before | After paying AED 200,000, same term | After paying AED 200,000, same instalment | |
|---|---|---|---|
| Monthly instalment | AED 7,072 | AED 5,658 | AED 7,072 |
| Time left | 20 years | 20 years | About 13 years 9 months |
| Interest still to pay | AED 697,355 | AED 557,884 | AED 364,859 |
| Interest saved | None | AED 139,471 | AED 332,496 |
The fee is small next to that. Under the cap it could be up to AED 10,000 here (1% of the balance), against a first-year interest saving of about AED 11,500, so even the maximum is recovered within a year.
These are illustrations, not quotes The figures assume the rate stays at 5.84% for the whole term. A variable rate resets with EIBOR, margins differ by bank and VAT is added to the fee. Our mortgage calculator runs your own numbers.
Does paying off a mortgage early make sense with EIBOR where it is?
Every dirham you prepay saves interest at your mortgage rate, with no risk. On a variable loan that rate is EIBOR plus your margin, and 3-month EIBOR was 4.340% on 30 October 2026. Paying early makes sense when nothing equally safe earns more after the fee, and you can spare the cash without leaving yourself short.
| Check | Leans towards settling early | Leans towards waiting |
|---|---|---|
| Cash buffer | Savings left for emergencies after paying | Paying would empty your savings; getting cash back means a new loan within CBUAE limits |
| Rate type | Variable, or the fixed period has ended | Inside a fixed period with a high break cost |
| Other uses of the cash | Nothing equally safe pays more than your mortgage rate | A planned purchase or deposit |
| Plans for the home | Keeping it for years | Selling within months: the sale settles the loan anyway |
We don't forecast rates. If EIBOR falls, each dirham prepaid saves a little less; if it rises, it saves more. The CBUAE anchors its Base Rate to the Federal Reserve, which meets on 8–9 December; our guide to the EIBOR rate explains resets. With Islamic home finance, ask the same questions of the profit rate in your Ijara or Murabaha contract.
Which letters does your bank have to give you?
Three matter: a liability letter showing what you owe on a given date, a clearance (no-liability) letter once you have paid, and the bank's letter asking DLD to remove the mortgage. The CBUAE requires a liability or no-liability letter within 7 complete business days of your request, and caps what banks charge for them.
| Document | What it does | CBUAE rule (fees before VAT) |
|---|---|---|
| Liability letter | States the amount needed to settle on a date; DLD asks for it when a mortgaged home is sold | AED 85 cap; within 7 complete business days |
| Clearance (no-liability) letter | Confirms nothing is owed | AED 95 cap; within 7 complete business days |
| Letter for mortgage removal | Lets DLD release the mortgage, unless the bank files it online | No separate line; an NOC is capped at AED 150, other letters at AED 90 |
| Your post-dated cheques | Handed back once the loan is paid off | Within 7 complete business days of the payoff |
A liability letter is valid for a date and interest keeps running, so check its expiry and whether the figure includes the early settlement fee.
How do you release the mortgage at the Dubai Land Department?
Paying the bank doesn't change the title deed by itself: the mortgage stays registered until DLD records its release. The bank can file the release through DLD's online mortgage system, or give you a letter for mortgage removal to take, with your Emirates ID, to a Real Estate Registration Trustee centre.
| DLD mortgage release | Fee |
|---|---|
| Mortgage release | AED 1,000 |
| New title deed (ordinary or usufruct title deed) | AED 250 |
| Knowledge and innovation fees | AED 10 + AED 10 |
| Trustee centre service fee, if you go to one | AED 300 + VAT |
| Total at a trustee centre | AED 1,570 + VAT on the AED 300 |
DLD gives 10 to 15 minutes as the service time and emails a mortgage release letter and the title deed. Check that the new deed no longer shows the mortgage.
How does early settlement work when you sell?
When you sell a mortgaged home, the buyer's money pays off your loan at the transfer. DLD's service for registering the sale of a mortgaged property needs a liability letter from your bank and three manager's cheques: the debt to your bank, the rest of the price to you, and DLD's 4% fee.
After the sale is registered at a trustee centre, you hand your bank its cheque and it issues the mortgage release letter, and DLD completes the release, the transfer and any buyer's mortgage; DLD lists AED 1,290 for the release and AED 315 for the trustee on this route. It is still an early settlement, so the capped fee applies: agree in the sale contract (Form F) who pays it.
What does a mortgage buyout to another bank cost?
Under a CBUAE rule, any borrower can move a loan or financing to another bank or finance company in the UAE, and the current lender's early payment fee is capped at 1% of the outstanding balance or AED 10,000, whichever is less. DLD then registers the mortgage to the new lender for 0.25% of the mortgage value plus fixed fees.
The new lender must apply the CBUAE's limits on loan amount, term and repayments, so a lower valuation or income can stop the switch. Before refinancing you, it must also give you in writing a comparison of the total interest on your current loan and on its offer: set that against these costs.
| Cost of switching | Charged by | On an AED 1,200,000 balance |
|---|---|---|
| Early settlement fee | Your current bank, under the CBUAE cap | Up to AED 10,000 + VAT |
| Mortgage transfer, 0.25% of the mortgage value | DLD | AED 3,000 |
| Title deed, knowledge and innovation fees | DLD | AED 270 |
| Service fee, if filed at a trustee centre | The trustee | AED 4,000 + VAT |
| Processing, valuation and other fees | The new bank | As set out in its offer |
Over 20 years, AED 1,200,000 costs AED 8,487 a month at 5.84% and AED 8,147 at 5.34%, about AED 340 less. The AED 13,270 of capped and DLD fees takes about 39 months to recover, longer with VAT and the new bank's fees, so a switch pays when the gap is wide or you will keep the loan for years. Compare lenders with our guide to the best banks for Dubai mortgages.
Frequently asked questions
Can I pay off my mortgage early in the UAE?
Yes, in full or in part. The CBUAE caps the bank's fee at 1% of the outstanding balance or AED 10,000, whichever is less, plus VAT; a fixed-rate loan can add the bank's actual break cost.
How much is the early settlement fee on an AED 1.5 million mortgage?
At most AED 10,000 plus VAT, because 1% of AED 1,500,000 (AED 15,000) is above the AED 10,000 ceiling. Under AED 1 million, the maximum is 1% of the balance.
Is there a fee for a partial settlement?
There can be. The CBUAE caps partial settlement charges on home loans at 1% of the outstanding balance or AED 10,000, whichever is less, and the interest must then be recalculated on the principal left.
How long does a bank take to issue a liability letter?
No more than 7 complete business days from your request, under the CBUAE's Consumer Protection Standards. The fee for a home loan liability letter is capped at AED 85 before VAT.
How much is the mortgage release fee in Dubai?
DLD charges AED 1,000 to release a mortgage, plus AED 250 for the new title deed and AED 20 in knowledge and innovation fees. A trustee centre adds AED 300 plus VAT.
Should I pay off my mortgage early or invest the money?
Prepaying earns your mortgage rate with no risk, 5.84% in our EIBOR-based example. It makes sense when nothing equally safe pays more after the fee and you keep an emergency buffer, because the cash is hard to get back out.
Sources
- CBUAE Rulebook: Decision No. 96/2019 amending Appendix 2 of Regulation No. 29/2011 (home loan early and partial settlement caps, letter fee caps, VAT, fees below the cap; checked 1 November 2026)
- CBUAE Rulebook: Resolution No. 26/3/2018 amending Article 20(b) of Regulation No. 29/2011 (moving a loan to another bank, fee cap and conditions; checked 1 November 2026)
- CBUAE Rulebook: Regulations Regarding Mortgage Loans (Article 3 debt burden ratio; Article 4 fee schedule, break cost and refinancing; checked 1 November 2026)
- CBUAE Rulebook: Consumer Protection Standards, Article 7 (refinancing comparison, post-dated cheques, liability letters, interest after early settlement; checked 1 November 2026)
- Central Bank of the UAE: EIBOR Rates (3-month EIBOR fixing of 30 October 2026; checked 1 November 2026)
- Central Bank of the UAE: CBUAE Maintains the Base Rate at 3.9%, 28 October 2026 (PDF) (Base Rate and its anchor to the Fed; checked 1 November 2026)
- US Federal Reserve: FOMC meeting calendar (next meeting 8–9 December 2026; checked 1 November 2026)
- Dubai Land Department: Mortgage release application (release routes, documents, fees, service time; checked 1 November 2026)
- Dubai Land Department: Registering the sale of a mortgaged property (liability letter, manager's cheques, release fees on a sale; checked 1 November 2026)
- Dubai Land Department: Request for mortgage transfer (moving a mortgage to another bank: documents and fees; checked 1 November 2026)
Selling, or moving your loan before you buy again? Talk to an agent about timing, or request a valuation to see what your home could clear.
