A charge made by the lender for repaying your loan early.
Mortgage providers often have special offers to encourage people to take out a mortgage with them, and these are usually in the form of short-term introductory benefits on your mortgage. These benefits might be a discounted rate, a fixed rate, or a capped rate for a number of months or years. Because these are effectively being offered to you at a loss to the mortgage provider, they rely upon you remaining with that mortgage provider for a long time. As such, these types of mortgage will often have some sort of redemption penalty. This means that if you want to pay off your mortgage early, or move it to another mortgage provider, you will have to pay a redemption penalty. This penalty is normally payable at any time during your introductory offer, and after that time you can move or pay off your mortgage, without incurring a penalty. If the redemption penalty is applicable after the end of your introductory period, this can be referred to as redemption overhang.
A charge made for paying off a loan, or debt balance, before an agreed date.
Most lenders charge a redemption penalty when a loan or other finance agreement is settled early. The amount of the penalty varies between lenders, and is usually calculated in a number of months interest forward, that you would have paid if you had chosen not to settle the loan.
Sometimes referred to as breakage costs, this is a charge levied by the lender when the loan is repaid or reduced before the end of the full term to compensate the lender for a loss of future profits. It is important to differentiate between a redemption penalty which may apply to breaking the loan as opposed to the cost a borrower may incur on breaking a fixed term product (eg a SWAP or gilt).
The money you will be charged if you want to go for the lender or you want to pay a part of your mortgage deal somewhere at the time of initial low rate period.
This is a charge made by the lender payable if you pay off your mortgage before a certain time. This penalty can be expressed in a number of ways, either as a percentage of the redeemed mortgage, or as a set penalty i.e. 6 times you monthly mortgage payment. The penalty period can be the same as the fixed or capped term that was initially taken. The more competitive the mortgage interest rate, the longer the penalty period.
a charge levied by a mortgage lender when a mortgage is repaid by the borrower before the agreed term
a penalty written into the mortgage contract stating that the mortgage holder cannot end the contract within a set period without paying a charge
A penalty payment charged by a Lender if a loan is repaid within a period specified in the mortgage offer (some loan products only)
Penalty charge applied by a mortgage lender if you try and get out of a mortgage early. Well worth looking at the small print of your mortgage agreement to see what you're letting yourself in for.
Repayment Mortgages Self Certification
A penalty that is collected when mortgage is repaid early. If your mortgage issues an interest rate discount and you leave after the discount period stops then you are subject to a penalty. In addition, you will be penalised if you re-mortgage your home before the term.
The amount of money you will be charged if you wish to switch lender or pay off part of your mortgage during, and sometimes after, an initial cheap-rate period.
An additional charge made by the lender if the mortgage is repaid within a pre-agreed period of time. These have become increasingly common with the growth in fixed rate and discounted products. They are generally imposed to stop borrowers hopping from one lender to another simply to take advantage of the latest discount or cheap fixed rate. Normally expressed as a number of months interest within a set period of years i.e. 6 months interest if redeemed within the first seven years but may also be expressed as a percentage of the mortgage debt (i.e. 5% of the mortgage if redeemed within the first seven years). Careful attention should be paid to these penalties as they vary considerably from lender to lender and the lower and shorter the penalty the more attractive the deal.
See Early Repayment Charge (ERC).
This is a charge when you pay off your mortgage before the end of the mortgage term and you are on a fixed interest rate.
If you leave certain types of mortgage (eg: fixed rate, capped) early, you will be charged by the lender for doing so. Signing up for a mortgage that has redemption penalties should be avoided wherever possible, especially where the redemption period is longer than the fixed/capped period. They are sometimes known as Redemption Charges or Settlement Fees.
Lenders charge a penalty if you pay off your mortgage when you are on a fixed rate.
this is becoming a less regular occurrence than it once was, but is still applicable to many mortgage deals available today. The redemption penalty is a fee that is sometimes levied if a borrower repays or switches mortgage providers within a certain period of time.
If you try and bow out of a capped rate mortgage, discounted rate mortgage or fixed rate mortgage early, you'll be liable for one of these.
This is a penalty charged on traditional (i.e. non- flexible) mortgages when the loan is repaid in full within a set period. Usually it applies on a pro rata basis when capital repayments are made outside of the agreed monthly payments. Many early repayment charge periods are linked to those of offers, such as capped, discounted or fixed rate periods. However, some mortgages have extended early repayment charges which tie-in borrowers even while they are paying the Lender's standard variable rate.
