A buyout sounds like paperwork: one bank pays off another. In practice the new bank tests you from the start, and the old bank keeps its mortgage on the property until it is paid. Here is how it works in Dubai, what it costs, and the asset-backed alternative.
An owner in Dubai has a mortgage with one bank and wants something to change. Sometimes the goal is a lower rate. Sometimes it is more money out of the same property, or a sale, or a way out of a bank that will not move. All of these run through the same steps at the Dubai Land Department (DLD), the government office that keeps the property register.
This guide explains those steps and their costs. It then shows where a buyout fails, and the asset-backed alternative that NEMAX Finance, a Dubai-based asset-backed co-financing platform, is built on.
A mortgage buyout is when a new bank pays off your mortgage at your current bank and registers its own mortgage on the property. The property stays yours. Only the bank on the register changes.1 Banks advertise it as switching your home finance to them, usually for a lower rate or a larger amount.2
The law behind it is short. Under Dubai's mortgage law, a mortgage exists only once it is registered at DLD, and it ends "upon full repayment of the secured debt".3 The owner may repay before the end of the term.3 So a buyout is two registrations: the old mortgage is released, and the new one is recorded.
Only a bank or a finance company licensed by the Central Bank can register a mortgage in Dubai.3 That is why the new party in a buyout is always another bank.
Five steps, in a fixed order.
A trustee centre, an office approved by DLD to register deals, says the whole route usually takes 3 to 5 weeks. For a self-employed owner or a non-resident, it says 6 to 10 weeks.1 The fees at each DLD step are listed in what a Dubai property transfer really costs.
Where the money and the mortgage move
A recent reader question asks what the exit cost actually looks like. The Central Bank caps several bank fees on home finance. These are maximums, before VAT.6
Then come the DLD fees for the new mortgage. Registration costs 0.25 per cent of the mortgage value. On top come AED 250 for the title deed, two charges of AED 10, and AED 4,000 plus VAT if a trustee office, a DLD-approved centre, processes it.7 If you stay with your bank and it increases the amount instead, DLD charges 0.25 per cent of the increase.8
On a balance of AED 1.5 million, the capped early settlement fee is AED 10,000, and DLD registration of the new mortgage is AED 3,750. The new bank's own fees and the valuation come on top, and each bank sets those.
Owners ask what actually happens when they try to sell a property that still has a mortgage on it. A release is the last step of every route out of a mortgage. It happens when you pay off the balance yourself, when a new bank buys it out, or when you sell.
When you sell a property that still has a mortgage, DLD has a separate procedure. The buyer and seller go to a trustee centre with the seller's liability letter. They also bring three manager's cheques: cheques issued by a bank. One goes to the bank for the debt. One goes to the seller for the rest. The third goes to DLD for the 4 per cent transfer fee.9 The sale is completed only after the bank's mortgage release letter is submitted.9 The release itself costs AED 1,290 at DLD, plus AED 315 for the registrar.9
Owners also ask whether they can sell a property that has two mortgages on it. Yes, but both have to be cleared. The law lets an owner sell a mortgaged property only with the approval of the bank that holds the mortgage.3 With two mortgages, that means two banks, two liability letters and two releases. Why the first bank holds that power is explained in why the first bank holds a veto over a second charge.
The same release step is often what stops a sale on the day, as shown in why Dubai deals die on transfer day.
The buyout depends on the new bank, and the new bank tests you again. A trustee centre lists what it looks at: income, employment, credit record, existing debts and the current value of the property.1 Your history with the old bank does not carry over.
Four things stop a buyout most often.
The bank side of these refusals is covered in why a Dubai mortgage gets declined on DBR and LTV.
If the only goal is a lower rate, and the new bank says yes, a bank buyout is the right tool. It is cheaper than any alternative.
The asset-backed alternative is for a different owner. The property is strong, the owner needs capital from it, and the bank file does not pass. NEMAX starts from the property, not from the income file. The first question is what the property is worth today. The second is how much of that value is free.
When the property already has a bank mortgage, the balance is part of the calculation. The amount is up to 70 per cent of the recent value, less what is still owed to the bank. The bank has to be paid and its mortgage released before the property can move, as the law requires.3
For the term of the deal, the property is held by an SPV, a separate company set up for this one deal. The SPV is registered in ADGM, the Abu Dhabi Global Market. NEMAX holds a share in that company for the term. The owner keeps the use of the property: live in it, rent it out or renovate it. The co-financing is secured by the property. Setting up the SPV and registering the property in its name are real costs, and they are part of the deal terms confirmed after valuation.
The main terms are short.
Here is an illustration only, not an offer. An owner has a villa worth AED 6 million with AED 1.5 million still owed to the bank. The asset-backed ceiling is 70 per cent of AED 6 million, so AED 4.2 million. After the bank is paid, up to AED 2.7 million is left. The final numbers are set after valuation.
How much a property can release is shown step by step in how much equity a Dubai property can release.
| Bank buyout | Paying it off yourself | NEMAX (asset-backed co-financing) | |
|---|---|---|---|
| Who checks what | The new bank checks your income, debts and the property1 | Nobody: you need the cash | The property and the free value in it |
| How much | Inside the Central Bank ceilings, for example 60% on an investment property for an expatriate10 | Nothing new | Up to 70% of recent value, less the bank balance, from AED 1 million |
| Cost | New bank fees, DLD 0.25%, early settlement fee up to 1% or AED 10,00067 | Early settlement fee up to 1% or AED 10,000, DLD release fees69 | Capital allocation fee from 14%* a year, plus deal costs |
| Term | Up to 25 years10 | None | From 12 months |
| After it | The property carries the new bank's mortgage | The property is free of any mortgage | Held by an SPV; you keep the use of it |
Have a Dubai property with a mortgage on it, and a new bank that will not move it? NEMAX reviews the property, the balance and the recent value, and confirms in writing what it can support, before any commitment.
Six checks, before you ask any bank.
The sale and the release happen together at a trustee centre. The seller brings the bank's liability letter, and the buyer's money is split into three manager's cheques: the bank's debt, the seller's remainder and the DLD fee.9 DLD completes the sale only after the bank's mortgage release letter is submitted.9
No. Central Bank rules require banks to issue liability statements and clearance letters to individual customers within 7 working days of the request.4 A bank that misses the deadline is fined AED 10,000 per violation.4 Keep the date of your request in writing.
A new bank can pay off both, but it tests you as a new applicant for the full amount: income, debts and a fresh valuation.1 Both old banks must issue liability letters and release their mortgages. The asset-backed alternative counts both balances: up to 70 per cent of the recent value, less what is owed.
A new bank pays off your mortgage at your current bank and registers its own mortgage on the property at DLD. The property stays yours; only the bank on the register changes.1 The new bank checks your income, debts and the property's value before it agrees.
It means the bank's mortgage is removed from the property register. In Dubai a mortgage ends upon full repayment of the debt.3 The bank then issues a release or clearance letter, and DLD records the release.
In a sale of a mortgaged property, DLD charges AED 1,290 for the mortgage release procedure and AED 315 for the registrar.9 The bank's clearance letter is capped at AED 95, before VAT.6
Ask your bank for it in writing. Central Bank rules require banks to issue liability statements and clearance letters to individual customers within 7 working days.4 For a home finance customer, the fee for a liability letter is capped at AED 85.6
It is capped at 1 per cent of the outstanding balance or AED 10,000, whichever is less. The same cap applies to partial settlement.6
Yes, if both banks agree and both are paid. The law allows a mortgaged property to be sold only with the approval of the bank that holds the mortgage.3 At DLD the sale is completed only after the mortgage release letter is submitted.9
DLD charges 0.25 per cent of the mortgage value, plus AED 250 for the title deed and two charges of AED 10. A trustee office adds AED 4,000 plus VAT.7
Yes, if the property has enough free value. The asset-backed alternative starts from the property and its recent value, not from your income. The amount is up to 70 per cent of the recent value, less the bank balance, from AED 1 million.
No, NEMAX is not a bank or a lender. It is the asset-backed alternative: it structures co-financing. For the term of the deal, the property is held by an SPV, and NEMAX holds a share in that company. The co-financing is secured by the property, and the owner keeps the use of it.
If a buyout stops at your income, your company or the valuation, NEMAX reviews the property, the balance and its recent value instead, then confirms in writing what co-financing secured by the property can support, with LTV at or below 70 per cent and from AED 1 million.
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