Redemption penaltiesCharges paid to the lender in compensation for lost interest if you redeem your mortgage ahead of schedule. During a discount period you will be severely penalised if you try to switch to another product or mortgage provider. Penalties can be stepped just like discounts, and can be particularly severe within the first year. This is to ensure that the costs that the lender endures in setting up the mortgage are always covered. Penalties can be a fixed sum of money, though are often proportion of the loan. With cashback mortgages, you often have to repay the amount of money you received as cashback.
This is the right of the mortgagor to recover mortgaged property on repayment of the loan and any interest due. This legally means that once you as the borrower have finished repaying the mortgage you took out, the property is yours and the lender has no further claim on it. If you pay of the mortgage ahead of schedule you may face a redemption penalty which compensates the lender for loss of interest.
The re-purchase of a security, such as a bond or preferred stock, by the issuing company at or before maturity.
Redemption cushionRedemption cushion
The percentage by which the conversion value of a convertible security exceeds the redemption price (strike price).
The process of canceling a defeasable title to land, such as is created by a mortgage foreclosure or tax sale.
Overhanging redemption penaltyOverhanging redemption penalty
An early redemption charge that lasts beyond the benefit period is referred to as an extended or overhanging redemption penalty. These should be avoided where possible.
Further SuggestionsRedemption statement
Preferred equity redemption stock (PERC)
Extended redemption penalty
Mandatory redemption schedule
Right of redemption
Redemption penalty overhang
gross redemption yield
right of redemption