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From a property finance or mortgage perspective, a buyout is the process of transferring your remaining loan balance from one financial institution to another—typically to secure better terms, such as lower interest rates or improved repayment options.
A great time to review your mortgage and consider switching to another lender is when your initial fixed-rate period ends. Typically, once this period expires, your loan automatically shifts to the bank’s "follow-on rate," which often results in higher monthly payments.
This follow-on rate is usually based on the bank's margin plus the EIBOR (Emirates Interbank Offered Rate). Depending on the terms, your rate may adjust on a monthly, quarterly, semi-annual, or annual basis—potentially impacting your overall affordability.
The primary reason to transfer your outstanding balance to another institution is to reduce your overall costs and save money.
ou might notice that your interest rate has increased after your initial term ended compared to the rate you originally signed up for. Alternatively, the market may now offer significantly better mortgage products than those available when you first took out your loan.
Transferring your loan to a lender with better rates can lead to significant savings in two key areas:
The most immediate benefit is the reduction in your monthly installment. By switching lenders, you may secure significantly lower profit or interest rates, resulting in instant cash savings through reduced monthly payments.
The less obvious but often greater savings come from reduced interest costs over the life of your loan. While lower interest rates typically mean smaller monthly payments, they also allow your principal balance to decrease at the same or even faster pace compared to your current mortgage, helping you save more money in the long run.