Understanding What You Really Pay When Financing a Home in the UAE
Getting a mortgage in the UAE can feel like a milestone moment — a tangible step toward owning your dream home or expanding your property portfolio.
But behind the excitement of mortgage approval lies a crucial question every smart buyer must ask:
“What is the real cost of my UAE mortgage?”
While banks advertise attractive interest rates and low monthly installments, the true cost involves a complex mix of fees, charges, and mandatory expenses that can catch even experienced buyers surprise.
In this detailed guide, Ricadi Mortgages breaks down every visible and hidden cost — so you can make fully informed, transparent financial decisions.
1. The Big Picture: What Makes Up the Total Mortgage Cost?
When calculating your total mortgage cost in the UAE, you need to consider two categories of expenses:
- Upfront Costs: Paid at the time of property purchase or mortgage approval.
- Ongoing Costs: Paid annually or monthly throughout the loan tenure.
Each lender and emirate may differ slightly, but the underlying structure of fees remains constant.
2. Upfront Mortgage Costs in the UAE
Let’s break down the one-time costs associated with starting your mortgage journey:
a. Property Valuation Fee
Banks require a third-party valuation before approving your mortgage.
- Purpose: To assess the property’s true market value.
- Typical Range: AED 2,500 – AED 3,500 (plus 5% VAT).
- Tip: Some banks waive this fee during promotional campaigns — check with Ricadi’s mortgage advisors for current offers.
b. Bank Processing Fee
Charged the bank for reviewing and processing your mortgage application.
- Typical Range: 0.5% to 1% of the total loan amount (subject to 5% VAT).
- Example: For a mortgage of AED 2 million, expect to pay around AED 10,000 – AED 20,000.
- Negotiation Insight: For high-value or HNI clients, banks occasionally reduce or cap this fee.
c. Down Payment Requirement
The UAE Central Bank mandates a minimum down payment:
- For Residents: Minimum 20% for properties under AED 5M; 30% for properties above AED 5M.
- For Non-Residents: Typically 25% – 40% depending on the bank and property value.
- Note: This is not a fee, but a critical component of your total upfront investment.
d. Dubai Land Department (DLD) Registration Fee
If you’re buying in Dubai, DLD charges 4% of the property value, plus AED 580 admin fee.
- Example: For a property worth AED 2 million → AED 80,580 in total.
- Paid To: Dubai Land Department through the trustee office at registration.
- Tip: Some developers offer to cover part of the DLD fee in off-plan purchases.
e. Mortgage Registration Fee
In addition to the DLD property registration fee, there’s a 0.25% mortgage registration fee on the loan amount, plus AED 290 as an admin fee.
- Example: On a loan of AED 1.5M, mortgage registration fee = AED 3,750 + AED 290.
- Paid To: Dubai Land Department.
f. Property Agent Commission
If you’re purchasing through an agent:
- Standard Rate: 2% of the property value (plus VAT).
- Tip: Always clarify whether VAT is included in the agent’s commission before finalizing agreements.
3. Ongoing and Recurring Mortgage Costs
Once your mortgage is approved and active, several recurring costs continue throughout the tenure.
a. Mortgage Life Insurance
Banks mandate life insurance covering the borrower’s life for the mortgage period.
- Rate: 0.3% – 0.5% annually of the outstanding loan amount.
- Type: Some banks integrate this into the monthly EMI; others require annual payment.
- Note: You can often choose between the bank’s insurer and an independent provider for better rates.
b. Property Insurance
Protects the building against damages such as fire, water, or structural damage.
- Rate: Typically 0.05% – 0.1% of the property value per year.
- Tip: Ensure the coverage aligns with your property’s actual replacement value, not the purchase price.
c. Early Settlement / Partial Payment Fee
If you decide to repay your mortgage early or make additional lump-sum payments:
- Standard Fee: 1% of the amount settled or AED 10,000, whichever is lower.
- Good to Know: Some banks offer partial payment allowances (e.g., up to 20% annually) without fees.
d. Interest Rate Adjustments and EIBOR Link
Most UAE mortgages are variable rate loans linked to EIBOR (Emirates Interbank Offered Rate).
- As EIBOR changes quarterly, your interest rate — and thus your monthly payment — can fluctuate.
- Ricadi Insight: Opting for a fixed-rate period (e.g., first 3–5 years) provides payment stability.
4. Hidden or Overlooked Mortgage Costs
These lesser-known charges can make a difference:
- Trustee Office Fee: AED 2,100 – 4,200, depending on whether the buyer and seller are individuals or companies.
- Document Attestation and Notary Fees: AED 300 – 800.
- Maintenance and Service Charges: Varies property and community.
- Currency Conversion / Transfer Costs: For non-resident investors, conversion fees can add 0.25% – 1% of transfer value.
- Admin and Courier Charges: Some banks charge AED 100 – 500 for document handling.
5. Estimating the True Mortgage Cost: A Practical Example (Updated 2025 Scenario)
To understand how mortgage-related expenses add up in the UAE, let’s walk through a realistic example reflecting 2025 market norms.
Scenario Assumptions:
- Property Price: AED 2,000,000
- Loan Amount: AED 1,500,000
- Tenure: 25 years
- Interest Rate: 3.99% (Fixed for 3 Years)
| Expense Type | Approx. Amount (AED) |
|---|---|
| DLD Registration Fee (4% of property value) | 80,000 |
| Valuation Fee | 2,500 |
| Mortgage Registration Fee | 3,750 |
| Agent Commission (2%) | 40,000 |
| Life Insurance (Year 1) | 7,500 |
| Property Insurance | 1,500 |
| Total Approximate Initial & First-Year Cost | AED 135,250 |
Key Takeaway:
While banks in the UAE traditionally levy a processing fee (0.5%–1%), many now waive it entirely—especially for eligible clients, salary-transfer customers, or those applying through approved mortgage partners like Ricadi Mortgages.
This makes AED 135,000–140,000 a realistic expectation for upfront and first-year mortgage-related costs on a AED 2M property in 2025.
Additional Note:
These estimates exclude fluctuating factors like early settlement penalties or top-up loan charges, which differ across banks. However, with the right structuring and professional guidance, such costs can be minimized or even avoided.
6. Why Transparency Matters in UAE Mortgage Planning
For mid-income and high-net-worth individuals alike, transparency builds trust.
A mortgage isn’t just a loan — it’s a long-term financial relationship with your lender.
At Ricadi Mortgages, every client receives a detailed cost breakdown, upfront advice, and unbiased guidance across all UAE banks.
We believe an informed borrower is an empowered one — and our mission is to make every step transparent, compliant, and smart.
7. The Ricadi Edge: Transparency. Integrity. Results.
When you partner with Ricadi Mortgages, you gain access to:
- End-to-end mortgage assistance for residents and non-residents.
- Unbiased lender comparisons ensuring the best rates and lowest fees.
- Expert support for complex cases, refinancing, and buyouts.
- Trusted relationships with UAE’s leading banks and developers.
Conclusion: Know the Costs, Own with Confidence
Owning property in the UAE is an achievable dream — but the real power lies in knowing your numbers.
From valuation to registration, from life insurance to early settlement — every cost shapes your mortgage decision.
Ricadi Mortgages ensures there are no surprises — only smart financial steps toward your future home.
