What are the penalties for early redemption, or early repayment charges?

What are the penalties for early redemption, or early repayment charges?

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Penalties or overpayment charges are imposed by the lender if you pay back the mortgage within the special deal period, or sometimes even beyond the special deal period. Essentially they are charged by the lender to protect themselves. If, for example, you've taken out a fixed-rate for 2 years or 5 years, the lender will abort money to lend on to you and they will potentially be involved in a loss if you leave the mortgage early. Hence they impose this charge to protect themselves. Typically the overpayment charge will be anything up to 50% of the mortgage amount - quite a large amount - so you need to be careful in choosing a mortgage that you don't take out a mortgage where the early repayment charge exceeds the time you expect to stay in the property.