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Paying a mortgage off early (Redeeming a mortgage)

Although a mortgage is expected to be a long term commitment, many people find they can pay their loans off well in advance of the agreed loan term. This most often occurs because the borrower moves home.

A borrower must understand what early repayment penalties, if any, will apply should they clear their loan early. It is common for lenders to claw back the value of discounts or cashbacks if a loan is redeemed in the early years and fixed rates usually carry early redemption penalties for at least the period of time the rate is fixed, sometimes longer.

Many lenders make their loans "portable" which allows the borrower to transfer their existing mortgage amount and terms when they move and avoid the redemption charge. However, this will usually mean that they must still meet the status requirements of the lender when they move and there may be disadvantages if they need to borrow more or less than the original loan balance. It should also be noted that all mortgage products are not portable.


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