Processing Fee (Arrangement Fee)

A one time fee charged by the bank to cover the administrative costs involved in evaluating, processing, and structuring the mortgage. This includes underwriting, document preparation, review, and general administration.

In the UAE, the processing fee is usually charged as a percentage of the loan amount plus 5% VAT, although the actual percentage varies between banks. Some banks may offer promotional waivers for salary transfer customers, first time buyers, or discounted rates for high value loans.

In Islamic banking, this fee is not charged as a standalone administrative cost under Sharia principles. Instead, it is commonly structured as an Advance Rental Payment, which is treated as an advance lease payment that is asset backed and justified within the terms of the financing contract.

Note: As of February 2025, the UAE Central Bank requires processing fees and other associated costs to be paid upfront rather than financed within the mortgage amount.