Overpayment / Partial Prepayment / Prepayment

Refers to the payments made in addition to the regular monthly mortgage instalment (EMI). This helps reduce the principal loan balance faster and lowers the total interest paid over time. Many banks allow borrowers to make partial prepayments up to a certain limit annually without penalties. However, once this limit is exceeded, banks usually impose a penalty to compensate for lost interest income. Under UAE Central Bank regulations, penalty fees are capped at 1% of the prepaid amount, up to a maximum of AED 10,000 plus VAT (AED 10,500 incl. VAT).