Can I refinance if my property value has dropped?

Why the current valuation matters

Every refinance requires a fresh, independent valuation of the property. If the value has fallen since you took out your original mortgage, your loan-to-value ratio against the new value will be higher than expected, which can affect both the rate you're offered and how much the new bank is willing to lend.

Worked example

Say your outstanding balance is AED 1,200,000 and the property was originally valued at AED 1,600,000 (75% LTV). If a new valuation comes in at AED 1,400,000, your LTV against the new value rises to about 86%, above most banks' standard resident LTV limits. You would either need to bring roughly AED 80,000-100,000 in extra funds to bring the LTV down to an acceptable band, or find a bank willing to lend at the higher LTV, often at a less competitive rate.

What can happen if your LTV has increased

• You may fall into a higher LTV band with a less competitive rate
• The new bank may lend a lower amount than needed to fully settle your existing mortgage, requiring you to cover the shortfall
• Some banks may decline the refinance if the LTV exceeds their maximum threshold
• Cash back or promotional offers may not apply above certain LTV bands

What to do if this applies to you

1. 1Get an informal sense of current market value before committing to a paid valuation
2. 2Compare multiple banks, since LTV policies and risk appetite vary
3. 3Consider paying down part of the balance before refinancing to improve your LTV position
4. 4Ask your current bank whether it will renegotiate your rate without a full refinance and new valuation

Related reading

See do I need a new valuation to refinance, the full refinance cost breakdown, and our guide to mortgage rates in the UAE.