A mortgage redemption statement is a document issued by your lender that outlines the exact financial details required to repay your mortgage fully. It's similar to a final bill, specifying the outstanding balance, accrued interest, and any early repayment charges.

If you're remortgaging to pay off your Help to Buy Equity Loan, your redemption statement will include all of the above, but also detail the loan repayments, interest paid, and any outstanding amount if applicable.

Why do you need a redemption statement?

You'll typically require a redemption statement in the following scenarios:

• When selling your property, you must settle your mortgage. The redemption statement provides the precise amount necessary to clear the debt.
• If you're switching to a new mortgage deal, a redemption statement will inform you of the outstanding balance you need to pay off your current lender.
• If you aim to reduce your mortgage term or interest payments, a redemption statement will help you calculate the exact overpayment amount.
• If you're paying off your Help to Buy Equity Loan through a remortgage.

How to get a redemption statement

• 1

  Contact your lender

• Reach out to your lender and request a redemption statement. In some cases, your lender might contact you in advance, especially if your current deal is ending.
• If you've chosen to remortgage or you're planning to move, you can typically contact your lender by phone, online, or in person to ask for the redemption statement.
• Provide the necessary details, such as your mortgage account number and property address.

• 2

  Involve your solicitor

• Regardless of whether you're remortgaging, paying off your current mortgage in full, or moving house, you'll need your solicitor.
• They will prepare the mortgage documents, transfer the property's title, and manage the funds on your behalf.

• 3

  Apply for a new mortgage (if applicable)

• If you're remortgaging, your new lender might be able to obtain the redemption statement directly from your current lender.
• You'll need to go through the application process again with this new lender to receive a Mortgage in Principle (MIP) to have offers accepted on a new home.
• Note that a MIP generally expires after 60 or 90 days.

• 4

  Transfer funds and complete legal paperwork

• Your solicitor will draw down the funds from your old lender and transfer them to the new lender, or if you're paying off your mortgage completely they will facilitate this.
• They will also ensure the Land Registry is updated accordingly and organise the title deeds.

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How long does mortgage redemption take?

Typically, the entire process can take 2-4 weeks but in some cases, it could take longer, especially if there are any complications with the transaction. However, if you have access online you might be able to immediately access your redemption statement to streamline the process.

For example, multiple mortgages on the same property might exist. More than one charge secured against a home could complicate the redemption process as the lender needs to calculate the balance and any associated fees for each mortgage.

With interest-only mortgages, the capital repayment is deferred until the end of the term. Calculating the redemption figure can be more complex, considering the outstanding capital and accrued interest.

Offset or no-deposit mortgages allow you to reduce your interest payments by linking a savings account to your mortgage. Calculating the redemption figure can be more involved as it requires considering the balance of the linked savings account.

What happens to the title deeds?

Once you've fully repaid your mortgage, your lender will release the title deeds to you. These documents are legal proof of your ownership of the property.

If you're remortgaging: Your solicitor will usually hold onto the title deeds electronically until the new mortgage is secured. Once the new mortgage is in place, the title deeds will be transferred to your new lender.

Redeeming your mortgage with a Help to Buy Equity Loan

If you've taken advantage of the UK Government's Help to Buy equity loan scheme, redeeming your mortgage, particularly when selling your home, can be slightly more complex.

When you're ready to sell your home, you'll need to repay the Help to Buy equity loan, along with your mortgage. Here's a general breakdown of the process:

• Redemption statement request

  Your mortgage lender will issue your redemption statement which outlines the outstanding mortgage balance, any accrued interest, and early repayment charges if applicable.

• Equity loan amount

  Determine the amount you owe to the government. This depends on the initial loan amount, the interest accrued, and the current property value.

• The legal side

  Your solicitor will handle the legalities of the sale, including coordinating with the lender, the Help to Buy agency, and the Land Registry.

• Transfers and payments

  Your solicitor ensures that the correct amounts are paid to the appropriate parties, the title deeds are transferred, and the Land Registry is updated.

• Completion

  Once the sale is finalised, the proceeds will be used to repay your mortgage and the Help to Buy Equity Loan. Your solicitor handles the distribution of funds.

Key considerations for Help to Buy homeowners:

• Be aware of any early repayment charges that may apply to your mortgage. There may be fees associated with repaying the equity loan early.
• Ensure that you plan the sale of your home and the repayment of your mortgage and equity loan promptly to avoid penalties or delays.

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Am I liable to pay a mortgage exit fee?

Yes, you may be liable to pay a mortgage exit fee, also known as an early repayment charge (ERC). This fee is charged by some lenders if you repay your mortgage early, before the end of your fixed-rate term.

The amount of the ERC can vary, so it's crucial to check your mortgage terms and conditions to understand if you'll be charged and how much it will be.

• The earlier you repay your mortgage, the higher the potential ERC.
• Fixed-rate mortgages often have ERCs, while variable-rate mortgages may not.
• In some cases, you may be able to negotiate a lower ERC or waive it entirely, especially if you're a loyal customer.