What are redemption penalties?
A redemption penalty, otherwise known as an ‘Early Repayment Charge’, is a penalty charged by the lender if you repay part or all of the mortgage before a certain date – often, these charges are payable during the period of a fixed, discounted or capped rate in order to provide an incentive for staying on that product. When these penalties apply beyond the date at which the fixed, capped or discounted rate applies, this is known as an ‘extended tie-in’ – we try to avoid offering products with such a feature. Where friends are buying together, we believe it is important that you think about what would happen in the event that circumstances changed and it became necessary to sell the property before the period of the penalty had elapsed. For this reason we try to offer the option of mortgages with NO redemption penalties at all, wherever possible.
