Redemption Penalty

What is a Redemption Penalty?

A Redemption Penalty (also known as an Early Redemption Penalty) is a fee charged by a lender if you repay a loan or mortgage earlier than the agreed term. For mortgages, this cannot be more than the figure agreed in the mortgage agreement.


Q: How much is the penalty for paying off a mortgage early?

A: This varies depending on your overall mortgage and the percentage set by your mortgage lender.

Q: How can I avoid early redemption penalties?

A: Mortgage products without early redemption charges are available from some lenders, or alternatively you can wait until the end date of penalty’s eligibility.

Q: Are there any advantages?

A: If you get a good deal on a new mortgage, then you may well find that the cost of a redemption penalty is offset by the savings of a good rate.

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