Redemption Penalties
Before you apply for any mortgage, make sure you understand any
redemption penalties that apply.
They can be built in to any mortgage and are very common in fixed,
capped or discounted loans.
If you re-arrange your mortgage in the future and a redemption penalty
applies, you will have to pay a fee, usually geared to interest rates,
in order to leave your existing Lender.
What seems like a good deal when you set up your mortgage, doesn't seem
quite as keen when you find you have to pay six months interest penalty
& refund any cashback if you want to change in future.
Be careful that you make sure any mortgage offering discounted, fixed
or capped rates and/or cashback have redemption penalties that do not go
beyond the offer period. E.g. a 3 year fix with 5 year redemption period
is probably not the best deal you can get !
