A mortgage redemption figure is the total amount needed to pay off a mortgage in full.
This figure is important for borrowers who are;
- Considering paying off their mortgage early
- Switching to a different mortgage product, or
- Selling their property
Is a Mortgage Redemption Figure and Mortgage Redemption Statement the Same Thing?
Not quite.
While a “mortgage redemption figure” and “mortgage redemption statement” are related, they are different in the context of paying off a mortgage.
In short, the redemption figure is the key piece of information (the amount). The redemption statement is the document that communicates this information to the borrower in a detailed and official format.
Here’s a detailed explanation of the difference:
Mortgage Redemption Figure
A mortgage redemption figure is the total amount required to repay a mortgage at a specific date.
It includes:
- Outstanding Principal: The remaining balance of the loan.
- Accrued Interest: Interest accrued on the outstanding principal up to the redemption date.
- Early Repayment Charges (ERCs): Any penalties for paying off the mortgage early, if applicable.
- Administrative Fees: Charges for processing the redemption.
- Other Charges: Any additional fees such as exit fees or legal costs.
Mortgage Redemption Statement
The mortgage redemption statement is a formal document provided by the lender that outlines the mortgage redemption figure.
It provides all the details the borrower needs to make the payment.
It includes:
- Redemption Figure: The total amount required to repay the mortgage.
- Breakdown of Components: An itemised breakdown of the outstanding principal, accrued interest, early repayment charges, administrative fees, and any other charges.
- Redemption Date: The specific date for which the redemption figure is calculated.
- Payment Instructions: Information on how to make the payment, including bank details and reference numbers.
The Difference a Between Mortgage Balance and a Redemption Figure?
A mortgage balance and a redemption figure are also different things.
Mortgage Balance
The mortgage balance is the remaining principal amount of the loan that has not yet been repaid. It includes only the remaining part of the original loan amount.
For example, if you took out a £200,000 mortgage and have paid down £50,000 of the principal, the mortgage balance would be £150,000.
Mortgage Redemption Figure
The redemption figure is the total amount required to repay the mortgage. It includes the remaining part of the original loan amount, accrued interest, early repayment charges and any other fees.
Using the same £150,000 mortgage balance, if you have £2,000 in accrued interest, a £1,500 early repayment charge, and £300 in administrative fees, the redemption figure would be £153,800.
