Mortgage buyouts and transfers in Dubai

Most Dubai property transactions involve a mortgage on at least one side. A seller may still owe money to their bank, a buyer may be borrowing, and some owners simply want to move their mortgage to a different lender. Each of these adds banks, letters and cheques to the transfer, and each needs careful timing. This guide explains how mortgage buyouts and mortgaged transfers work in Dubai, step by step.

What is a mortgage buyout?

A mortgage buyout is when a new bank pays off your existing mortgage and replaces it with a new loan, usually on terms that suit you better. The property does not change hands. Instead, the DLD (Dubai Land Department) records the new bank as the mortgage holder in place of the old one.

The outline of a buyout is usually:

• The new bank assesses your application and the property is valued.
• Your current bank issues a liability letter, confirming the outstanding balance and any early settlement charge. Under UAE Central Bank rules, early settlement fees are capped at 1% of the outstanding balance or AED 10,000, whichever is lower.
• The new bank issues its final offer and pays off the old loan.
• The old bank issues a release letter, and the new mortgage is registered with the DLD.

The amount a bank will lend against a property is subject to its own policies and UAE Central Bank limits. As a guide, expatriate residents can borrow up to 80% on a first property worth up to AED 5,000,000 and up to 70% above that, with lower limits for second properties and off plan purchases.

Selling a mortgaged property

You can sell a property that still has a mortgage on it, but the bank's charge must be cleared as part of the sale. The key documents are:

• Liability letter: issued by the seller's bank, stating the exact amount needed to settle the loan. These letters are only valid for a limited period, so timing matters.
• Settlement: the outstanding amount is paid to the seller's bank, usually by manager's cheque, from the buyer's funds or the buyer's bank.
• Release letter: once paid, the bank issues a letter releasing its mortgage, which the DLD needs before the sale can complete.

The seller also needs the usual developer NOC (No Objection Certificate). Our selling checklist and guide to what an NOC is cover these in more detail.

Buying with a mortgage

If you are financing your purchase, your bank runs its own process alongside the sale:

• Pre approval: an initial indication of how much the bank may lend, based on your income and circumstances.
• Valuation: the bank instructs a valuer to confirm the property's value and charges a valuation fee, which varies by bank.
• Final offer letter: the bank's formal offer, setting out the loan and its terms.
• Mortgage registration: at transfer, the bank's mortgage is registered with the DLD against the new title deed. The DLD mortgage registration fee is 0.25% of the mortgage amount plus AED 290.

Chartered Conveyancing does not arrange mortgages or give financial advice. Speak to your bank or a regulated mortgage adviser about which product suits you.

How it comes together at the trustee office

The transfer itself takes place at a trustee office, an approved DLD registration centre. When mortgages are involved, payments are made by manager's cheques, which are cheques issued and guaranteed by a bank. A typical mortgaged sale involves separate cheques for:

• The seller's bank, to settle the outstanding loan.
• The seller, for the balance of the sale price.
• The DLD, for the transfer fee of 4% of the sale price.

The DLD registers the sale, the seller's bank releases its mortgage, and where the buyer is borrowing, the new bank's mortgage is registered. The new title deed is then issued in the buyer's name. For the full picture, see our guide to the Dubai property transfer process.

The coordination risk

With two banks, a developer, a buyer, a seller and the DLD involved, the most common problems are about timing rather than law:

• A liability letter expires before the transfer date and has to be reissued.
• A valuation comes in lower than expected, leaving a gap the buyer must fund.
• The outgoing bank is slow to issue its release letter, holding up registration.
• Names or property details differ between documents and must be corrected first.

Each delay can push back the trustee office appointment, which matters for buyers, sellers and brokers working to a deadline.

Keep your transfer on track

Chartered Conveyancing coordinates both banks, the developer and the trustee office as part of your transfer, so every letter and cheque is ready when it is needed. This article is general guidance, not legal or financial advice. Enquire today to discuss your sale, purchase or buyout.