Am I required to give a security cheque for a mortgage?

Why banks ask for a security cheque

A security cheque gives the bank a straightforward legal instrument to pursue if you stop repaying the mortgage. It typically covers the full outstanding loan amount and is not meant to be cashed for a monthly instalment — your regular monthly payments are usually collected by direct debit or standing instruction instead.

What changed in the law

In 2022, the UAE decriminalised bounced cheques for civil debts, meaning a bounced cheque is no longer automatically a criminal matter. However, a cheque remains a valid, enforceable civil debt instrument, and banks can still pursue the amount through civil courts if the mortgage defaults and the cheque is presented and dishonoured.

• The cheque is generally undated and held on file, not cashed during normal repayment
• It's typically only presented if you default seriously (multiple missed payments)
• A dishonoured cheque today generally leads to a civil claim rather than criminal prosecution
• It can still affect your credit record and future banking relationships

Is it ever optional?

In practice, almost all UAE banks make the security cheque a standard, non-negotiable condition of the mortgage contract, regardless of your income, credit score or the size of your down payment. A small number of Islamic finance structures document the equivalent security differently, but the underlying enforcement purpose is the same — see how Islamic mortgages work if this applies to you.

What happens step by step in a serious default

1. 1You miss several consecutive monthly instalments and the bank issues formal reminder notices
2. 2The bank classifies the loan as in default according to its internal policy
3. 3The bank may present the security cheque; if it bounces, this creates a civil debt claim
4. 4The bank can pursue recovery through civil courts, and separately may move toward repossession of the mortgaged property

How to limit your risk

• Keep your account funded and avoid missed instalments — this is the single biggest protection
• Talk to your bank early if you anticipate cash flow trouble, rather than letting the account lapse
• Confirm in writing when the cheque will be returned to you (typically on full settlement or refinance)

If you're refinancing to a new bank, your old security cheque should be returned once the original loan is settled — confirm this explicitly as part of your refinancing process. See what fees you'll pay when getting a mortgage for the other conditions attached to a UAE home loan.