What is a Redemption Statement & Why is it Important?

A mortgage redemption statement is a document supplied by your current mortgage lender which specifies the amount owed in order to discharge your mortgage in full. The redemption statement will specify:

• The full outstanding balance calculated to a particular day including interest owed.

• Early repayment charges which are applicable within a certain time frame of the mortgage.

• Redemption, closure or exit fees or some other form of administrative fee.

• A total redemption figure inclusive of the above.

By redeeming your mortgage you are paying all outstanding fees due to the lender in order for your mortgage account to be closed. The main reasons for redeeming a mortgage are:

· The end of the mortgage term.

· Paying off your mortgage in advance.

· The sale of a property.

· Remortgaging the property.

How do I obtain a statement?

If you wish to obtain an indicative statement. You can usually do so by contacting your lender, this will vary dependent upon lender but these are usually accessible by phone, internet banking, app and in branch.

However, if you are selling or remortgaging a property, your solicitor will have to request this on your behalf. This will be valid for a particular date or a specified period of time. It usually can take up-to a week to obtain this kind of statement.

What are Early Repayment Charges?

This is applicable in instances where you wish to conclude a fixed term mortgage early. This figure varies between different mortgage products and can sometimes be quite expensive, it is important to note this when looking to redeem your mortgage.

In addition to the ERC, there are other administrative charges, whilst they are not very expensive, they are important to note in addition to the other specific payments due. These charges usually refer to the lender’s costs for dealing with the discharge of the mortgage and are payable on most mortgages.

What about my deeds?

If the mortgage lender holds your original deeds, they should be returned following the discharge of the mortgage. Many people are unaware where their property deeds are as there is no legal obligation to hand these over. Usually, electronic deeds can be requested with the assistance of the Land Registry.

Is life insurance a good idea?

If you have a joint mortgage, it is advisable to obtain a life insurance policy should the unexpected occur. This will allow your family or partner to remain in the property, mortgage free and they will not have to struggle for payments to be met. There are several different policy types which should be considered:

• Decreasing term life insurance – The sum assured decreases in line with the balance of your repayment mortgage, and is designed to clear any outstanding balance.

• Lever term assurance – The payment figure usually remains the same regardless of when you die. This form of policy is well suited to interest only mortgages as the capital owed does not decrease.

• Whole life policy – This is not linked to your mortgage term or balance and is a set amount which will be payable upon death in any event.

For further information, please contact us.