There are a number of reasons why you might pay your mortgage off early. You could be selling the property, moving your mortgage to a new lender or lucky enough to have come into some money. Whatever the reason, you need to know exactly how much you owe the lender to pay it off.
What is a mortgage redemption statement?
A mortgage redemption statement is a document that tells you exactly how much it will cost to pay off your mortgage in full on a specific day.
It shows the remaining balance, the extra interest you will owe at that point and any exit fees for closing your mortgage account.
If there are any early repayment charges to pay – usually payable during the initial period of a fixed or discounted deal – they are also shown. They’re added together to show your redemption figure.
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What is a mortgage redemption?
A mortgage redemption is when you pay off your mortgage before you've reached the end of the term. Reasons why you might redeem your mortgage include:
You’re selling the property
If you sell the property you took the mortgage out on and don’t port the mortgage to a new property you’re buying, you’ll pay off the mortgage with the proceeds of the sale. You need a redemption statement to tell you how much of it needs to go towards paying off the mortgage.
You'll also need a mortgage redemption statement if you’re selling your home to buy a new one and taking out a mortgage from a different lender in order to buy it.
This could involve borrowing the same amount from the new lender as you owe on your current mortgage or a different amount, depending on the price of the home you’re buying.
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You’re remortgaging
When you switch your mortgage to a new lender without moving house, you redeem the existing mortgage on your property using the money from your new mortgage.
You might want to remortgage with a different lender to get a cheaper deal when your current one ends, or you might want a mortgage with different terms to your current one.
Another reason could be to get a type of mortgage product your existing lender doesn’t offer, for example, an offset mortgage where your savings balance is used to reduce the interest you owe on your mortgage.
As you need to use a solicitor or licensed conveyancer when you do this, they'll usually ask your current mortgage lender for the redemption statement on your behalf.
You can afford to pay your mortgage off early
It’s worth paying your mortgage off before the end of the term if you can as you’ll save money on interest. You might be able to if you’ve inherited some money, saved up or received a lump sum from your pension.
How much could my mortgage repayments be?
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How to get a mortgage redemption statement
To get a mortgage redemption statement, ask your lender. You may be able to access or request one through your mobile or online banking, or by filling in an online form, phoning your lender or asking for one in a branch. It could be emailed or posted to you if you can’t access it online.
If you’re remortgaging to a new lender, your solicitor or licensed conveyancer makes the request.
Mortgage redemption process
To redeem your mortgage when you’re not remortgaging, you need to go through the following steps:
1. Ask your mortgage lender for a redemption statement within 28 days of when you want to pay the mortgage off.
2. Once you’ve received it, pay your lender the redemption amount it shows on the date stated. You may owe more if you pay after this date due to the additional interest added.
Depending on the lender, you may be able to pay online, through your mobile banking app, by cheque or over the phone.
3. Appoint a solicitor to deal with the legal part of the redemption if your property is in Scotland or Northern Ireland.
4. If you were paying your mortgage by standing order, cancel it. If you were paying by direct debit, the lender will cancel this for you. Also cancel any insurance relating to the mortgage if you no longer need it.
When you redeem your mortgage by remortgaging to a different lender, you apply for a new mortgage with the new lender. The solicitor or licensed conveyancer dealing with it (you can use the one offered by the lender or appoint your own) gets your redemption statement from your current lender and handles the payments.
How long does it take to receive a mortgage redemption statement?
You can get a redemption statement instantly if you can access it online. If you request it via an online form, by email or phone, or in person, you usually receive it within five working days but it could take up to 10 days.
Other redemption statement FAQs
How long is a mortgage redemption statement valid for?
It’s usually valid for around 30 days but it depends on the lender. It could be valid for four weeks, 28 days or until the end of the month. In some cases, it may only be valid for 14 days. If you can’t pay off your mortgage during this period you need to ask for a new redemption statement.
Can I use the mortgage redemption statement for refinancing?
Yes. When you switch your mortgage to a different lender you need a mortgage redemption statement from your current lender so you know how much you need to pay off your old mortgage. The solicitor or licensed conveyancer handling your remortgage requests it.
Where can I find more information about mortgage redemption statements?
Visit your mortgage lender’s website for more information, such as how to get a redemption statement to pay off your mortgage and how long it’s valid for. Alternatively, contact your lender online, by email or over the phone, or visit a branch to find out more.
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