Early redemption charge

This is a charge made by your mortgage lender which is payable on certain types of loan - usually discounted or fixed interest rate loans. The charge is only applied if the loan is redeemed or part-redeemed within the specified early redemption charge period.

This is the downside of benefitting from the certainty conferred by fixed rates or the cheaper mortgage offered by discounted rates.

Some lenders lock you in to a three or six month redemption charge - you've been warned, if someone is offering you an incredibly good interest rate below the rate prevailing on variable rate mortgages, the chances are they want something - your loyalty, and that could mean it'll cost you if you decide to move lender in future.

See also: Financial Services