Hidden Costs to Watch for in Dubai Home Loans

Purchasing a property in Dubai is a major milestone, whether you're an expat or a UAE national. As you begin the process of applying for a home loan in UAE, it's essential to understand not just the interest rates and monthly repayments, but also the hidden costs that can catch borrowers off guard.

1. Down Payment Requirement

While this may not be "hidden" per se, many buyers underestimate the full financial impact of the required down payment. In the UAE:

Expatriates must typically pay at least 20–25% of the property value
UAE nationals are required to pay 15–20%

For properties above AED 5 million or off-plan purchases, down payment requirements can be even higher. This upfront cost is mandatory before your home loan in UAE is approved.

2. Dubai Land Department (DLD) Fees

One of the most significant hidden costs is the DLD fee, which amounts to 4% of the property value. This is a mandatory government charge when registering a property in Dubai. For a property worth AED 1 million, the fee would be AED 40,000—an amount that needs to be paid upfront or factored into your loan if the bank allows.

3. Mortgage Registration Fee

To register your home loan in UAE, the Dubai Land Department charges a mortgage registration fee equal to 0.25% of the loan amount, plus an admin fee. For instance, if your loan is AED 1 million, you will pay AED 2,500 or more in registration fees.

4. Bank Processing Fees

Most banks charge a processing fee to initiate your mortgage, which usually ranges between 0.5% and 1% of the loan amount. Although some banks run promotions waiving this fee, it is often non-refundable and due upon acceptance of the mortgage offer.

5. Valuation Fees

Before finalizing your home loan in UAE, the bank will carry out a property valuation to assess its market worth. This is typically done by an independent third party, and the cost—usually between AED 2,500 to AED 3,500—must be paid by the buyer, regardless of whether the loan is approved.

6. Life and Property Insurance

UAE banks often require you to purchase life insurance (linked to the mortgage) and property insurance. These are either one-time payments or rolled into the loan repayments. While life insurance ensures the loan is paid off in case of the borrower's death, the cost can vary depending on your age, health, and the loan amount. Property insurance generally costs 0.03% to 0.08% of the insured value annually.

7. Early Settlement and Exit Fees

If you choose to repay your mortgage early or refinance with another lender, be aware of early settlement fees. UAE Central Bank guidelines cap these at 1% of the remaining loan amount or AED 10,000, whichever is lower. However, some banks might add additional administrative charges.

8. Brokerage and Legal Fees

Working with a mortgage broker can simplify the process, but they may charge a service fee (typically around 1% of the loan amount). Additionally, if you use a legal consultant for the transaction, expect to pay legal fees for contract review and due diligence.

Final Thoughts

While getting a home loan in UAE opens the door to property ownership in Dubai, it's essential to look beyond interest rates and EMIs. Hidden costs—ranging from registration fees to insurance and broker charges—can add up significantly.

Before committing to any mortgage, make sure you: