Refinancing Your Mortgage in the UAE: A Complete Guide

Many homeowners in the UAE don’t realise they could save thousands of dirhams by refinancing their existing mortgage. Refinancing simply means replacing your current loan with a new one that has better terms — a lower interest rate, shorter repayment period, or more flexible conditions. If you’ve been paying your mortgage for a few years, it’s worth reviewing your options.

This guide explains what refinancing is, why it might make sense, and how to do it successfully.

What Is Mortgage Refinancing?

mortgage calculator uae refinancing is when you pay off your existing home loan by taking a new one from the same lender or a different bank. The new loan pays off your old balance and you start repaying under new terms. People refinance mainly to reduce interest rates, shorten the loan term, or access equity in their property.

Why Consider Refinancing in the UAE?

Lower Interest Rates: Rates fluctuate over time. If current market rates are lower than what you’re paying, refinancing could save you money.

Shorter Loan Term: Moving from a 25-year term to 15 years can cut interest dramatically.

Access to Cash: Some owners refinance to release equity for renovations or other investments.

Switch to Fixed or Variable Rate: If you’re on a variable rate and expect rates to rise, switching to a fixed rate can give stability.

When to Refinance

Refinancing makes sense if:

You’ve been in your mortgage for at least 2–3 years.

Current market rates are at least 0.5–1% lower than your rate.

You plan to keep the property long enough to benefit from the savings.

Always factor in any penalties for early repayment before you decide.

Costs Involved in Refinancing

While refinancing can save you money, there are costs to consider:

Early settlement fees charged by your current lender (often up to 1% of the outstanding balance).

Processing fees for the new mortgage.

Valuation fees for the property.

Registration charges with the relevant authorities.

Calculating the break-even point — when your savings exceed the costs — is crucial.

Steps to Refinance Successfully

Review Your Current Mortgage
Note your current rate, term, balance, and any penalties.

Check Market Rates
Compare what different banks are offering today.

Calculate Savings vs. Costs
Include early settlement and processing fees.

Prepare Your Documentation
Similar to your first mortgage application — salary certificates, bank statements, ID, etc.

Apply and Transfer
Once approved, the new lender settles your old loan and you begin paying under the new terms.

Fixed vs Variable When Refinancing

Just like a first mortgage, you’ll choose between fixed and variable rates. Fixed offers stability, while variable may start lower but can rise. Think about your risk tolerance and market outlook.

Common Mistakes to Avoid

Refinancing without factoring in all fees.

Taking a longer term that reduces monthly payments but increases total interest.

Ignoring your credit score — it still affects your new rate.

Not comparing multiple lenders.

Benefits Beyond Lower Payments

Refinancing can also help you:

Consolidate other debts at a lower interest rate.

Free up cash for investment or home improvements.

Restructure your finances if your circumstances have changed.

When Not to Refinance

Refinancing may not be worth it if you’re close to the end of your loan term, if fees are very high, or if you plan to sell the property soon. Always do the math.