UAE Mortgage Loans: A Detailed Comparison of Rates and Fees

When diving into the world of mortgages in the UAE, it’s essential to get a handle on the various fees and charges that come with it. These can include processing fees, application or pre-approval fees, valuation charges, early settlement fees, partial pre-payment fees, and insurance costs, to name a few. Each fee plays a unique role, from covering the bank’s administrative costs to compensating for early loan repayments. By understanding these fees, you can make savvy comparisons between different mortgage products, gauge the true cost of your loan, and select the one that fits your financial picture perfectly. Being well-informed not only helps you save money but also ensures a smoother, more manageable mortgage journey.

 Comparative Table of Mortgage Charges in the UAE

Charge Type	ENBD	FAB	ADCB Aspire	ADCB Privilege Club	ADCB Excellency	RAKBANK	SCB Home Suite	SCB Home Suite	SCB Sadiq Home Finance
Loan Processing Fee	1.05%	0.525%, AED 5250 min	0.7875%, AED 52500 max	0.7875%, AED 52500 max	0.525%, AED 52500 max	1.05% approved amount	1.05% approved amount	1.05% approved amount	Zero
Application Fee / Pre-approval Fee	Free	AED 525 (non-refundable, adjusted later)	Free	Free	Free	AED 5250 (non-refundable)	0.525% loan amount	0.525% loan amount	0.525% loan amount
Valuation Charges	AED 3150 (property), AED 21000 (self-construction)	N/A	AED 3150	AED 3150	AED 3150	AED 3150	Up to 3675	Up to 3675	Up to 3675
Early Settlement	1.05% or AED 10500	1.05%, max AED 10500	Free up to 30%, 1.05% over	Free up to 30%, 1.05% over	Free up to 30%, 1.05% over	1.05% or AED 10500	Up to 1.05%	Up to 1.05%	Up to 1.05%
Partial Pre-Payment Fee	1.05%, max AED 10500	1.05%, max AED 10500	Free up to 30%, 1.05% over	Free up to 30%, 1.05% over	Free up to 30%, 1.05% over	1.05%, max AED 10500	1.05% settlement amount	1.05% settlement amount	1.05% settlement amount
Late Payment Fee	AED 420	2.10% overdue amount (AED 52.50-210)	3.15%, max AED 735/month	3.15%, max AED 735/month	3.15%, max AED 735/month	AED 735	AED 577.5	AED 577.5	AED 577.5
Nonstandard Statement / Original Docs	AED 105	AED 105	AED 105	AED 105	AED 105	AED 105	N/A	N/A	N/A
Change in Property (SWAP)	Free	AED 1386	AED 1386	AED 1386	AED 1386	AED 1386	N/A	N/A	N/A
Liability / No Liability Letter	AED 52.5	AED 89.25	AED 89.25	AED 89.25	AED 89.25	AED 89.25	AED 52.5	AED 52.5	AED 52.5
No Liability Certificate	Free	AED 99.75	AED 89.25	AED 89.25	AED 89.25	AED 99.75	N/A	N/A	N/A
Request of Other Letters	Free	AED 94.5	AED 89.25	AED 89.25	AED 89.25	AED 78.75	N/A	N/A	N/A
Clearance Letter	Free	AED 99.75	AED 89.25	AED 89.25	AED 89.25	N/A	N/A	N/A	N/A
Switch Fees	1.05% or AED 10500	1.05%, max AED 10500	Up to 1.05% loan amount	Up to 1.05% loan amount	Up to 1.05% loan amount	N/A	N/A	N/A	N/A
Life Insurance (Single Applicant)	Individual profile and consent	0.0112% ADNIC, 0.0132% Noor Takaful, 0.0140% Salama	0.0184% monthly	0.0184% monthly	0.0184% monthly	0.33% monthly, reducing	0.33% p.a. min loan amount	0.33% p.a. min loan amount	0.33% p.a. min loan amount
Property Insurance	Individual profile and consent	0.0525% property value/year	0.42% property value/year	0.42% property value/year	0.42% property value/year	0.35% property value/year, recovered monthly	Up to 0.0483% p.a.	Up to 0.0483% p.a.	Up to 0.0483% p.a.
Insurance Assignment Fee	Check with bank	Check with bank	AED 5250	AED 5250	AED 5250	AED 262.5	AED 525	AED 525	AED 525
Interest Rate	2.14%-6.00%, linked to EIBOR	Fixed 1-5 years, 3.94%-4.44%	4.75% p.a.	4.75% p.a.	4.75% p.a.	Starting from 3.98%	5.15% (3M), 5.21% (6M)	5.15% (3M), 5.21% (6M)	5.15% (3M), 5.21% (6M)
Other Fees	N/A	N/A	N/A	N/A	N/A	AED 105 for Home in One	1.575% p.a. preset limit	1.575% p.a. preset limit	1.575% p.a. preset limit

 

The above table is accurate as of July 23 and is subject to change. The information has been collated based on public sources on a best-effort basis. Customers are advised to refer to the bank’s latest schedule of charges or obtain the same from a mortgage broker before signing up. Always ensure you have the most current information to make an informed decision.

 Analysis and Insights

1. Loan Processing Fee:

The mortgage loan processing fee in the UAE is a non-refundable charge imposed by banks to cover the administrative costs associated with processing a mortgage application. This fee typically ranges from 0.525% to 1.05% of the loan amount, with some banks setting a minimum fee threshold, such as AED 5,250. The processing fee is required upfront and is payable upon the submission of the mortgage application. It is important for borrowers to factor this fee into their overall cost considerations when applying for a mortgage, as it adds to the initial financial outlay required to secure the loan. This fee ensures that the bank can efficiently handle the documentation, credit checks, and other administrative tasks necessary to approve the mortgage.

• SCB Sadiq Home Finance stands out with no processing fee, making it the most attractive in this category.
• Other banks charge between 0.525% to 1.05% of the loan amount, with FAB offering the lowest percentage but with a minimum charge of AED 5250.

2. Application Fee: 

The application fee or pre-approval fee for mortgages in the UAE is a charge levied by banks to cover the costs of evaluating a mortgage application and providing a preliminary approval. This fee can vary, with some banks offering it for free, while others may charge a non-refundable amount, such as AED 525. In some cases, this fee may be adjusted against the processing fee upon loan approval. The pre-approval process involves assessing the borrower’s financial health, creditworthiness, and preliminary documentation to provide an indication of the loan amount they may qualify for. This fee ensures that the bank can carry out the necessary checks and due diligence before issuing a formal mortgage offer.

• ENBD offers a free application fee, providing an initial cost advantage.
• Other banks, especially RAKBANK, charge a non-refundable fee of AED 5250, which can be significant for applicants.

3. Valuation Charges:

Valuation charges on mortgages in the UAE are fees imposed by banks to assess the current market value of a property before approving a loan. These charges ensure that the property value accurately reflects the amount being borrowed, thereby mitigating the lender’s risk. Typically, valuation fees range from AED 3,150 to AED 3,675 for completed properties, with significantly higher costs for self-construction properties. These charges are standard across most banks, but they can vary slightly depending on the lender and the complexity of the property evaluation. Valuation fees are an essential part of the mortgage process, ensuring both the borrower and the lender have a clear understanding of the property’s worth.

4. Early Settlement and Partial Pre-Payment Fee

Early settlement and partial pre-payment fees on mortgages in the UAE are charges levied by banks when borrowers choose to pay off their mortgage ahead of schedule or make extra payments towards the principal amount. These fees are designed to compensate the lender for the loss of anticipated interest income. Typically, the early settlement fee is around 1.05% of the outstanding loan amount, though some banks offer a grace period allowing a certain percentage of the loan to be repaid early without any charge. Similarly, partial pre-payment fees are often aligned with early settlement fees, capping at a certain amount. These fees can vary across banks and specific loan agreements, so borrowers should carefully review their mortgage terms to understand the potential costs of repaying their loan early

• ADCB offers a favorable condition by allowing up to 30% of the loan amount to be settled early without any fees, beyond which the fees align with other banks.
• Standard Chartered Bank (SCB) offers early settlement and partial pre-payment fees at 1.05% of the total loan outstanding.

5. Late Payment Fee:

FAB’s late payment fees range between AED 52.50 and AED 210, which could be more advantageous compared to other banks charging a fixed higher fee.

6. Insurance and Life Insurance:

Life insurance fees vary by individual profiles and can be based on different insurance providers, impacting overall loan costs.

Property insurance rates vary significantly, with some banks offering as low as 0.0483% of the property value annually.

7. Interest Rates:

• Interest rates range broadly, with ENBD offering variable rates linked to EIBOR. Fixed rates across other banks typically start from around 3.94% to 4.75% per annum.
• SCB provides detailed rates for different tenors, starting at 5.15% for shorter periods.

Mortgage interest rates in the UAE are influenced by various factors including the Central Bank’s base rate, economic conditions, and the specific terms of the loan. Typically, mortgage rates in the UAE are either fixed for an initial period or variable, linked to the Emirates Interbank Offered Rate (EIBOR). Factors such as the borrower’s creditworthiness, loan-to-value ratio, and employment status also play crucial roles in determining the interest rate. Additionally, banks may offer preferential rates for salary transfer customers or those with significant financial assets. Overall, the UAE’s mortgage market is competitive, offering a range of rates and terms to suit different financial profiles and needs.

8. Additional Fees:

Non-standard charges, like change in property and liability letters, add to the overall costs and vary slightly across banks.