Early Redemption Payment

A home is an important financial commitment, as are the monthly payments on the mortgage. The payments on a home mortgage loan are typically spread out over a period of 15 or 30 years, but in some cases a homeowner may find him or herself in a position which allows them to repay part or all of the mortgage early. If you find yourself in that position, it is important to ensure that your mortgage does not have an early redemption penalty before using the extra cash to pay off the mortgage.

Every mortgage loan is different, with different terms and conditions with regards to early redemption penalties. Many mortgages have a clause which prevents prepayment for a specific period of time. This is meant to protect the mortgage lender and ensure that they are able to recover the costs associated with underwriting the mortgage loan. An early redemption fee is most common on loans that contain a discount period or low interest rate for an initial period of time.

The first step for any homeowner is to read their mortgage paperwork carefully to determine whether or not your mortgage loan contains a penalty for early redemption. If you are unsure, you may want to contact your mortgage lender for clarification on the terms and conditions. It is important to determine any penalties to which you will be subject before using your hard earned cash to make an early redemption on your mortgage loan.

Not all home mortgage loans contain an early redemption fee, and if your mortgage loan does not, you can make your decision to prepay your mortgage on purely financial terms. If you are subject to an early redemption fee, you will of course need to factor that fee into your financial calculations.