Redemption Figure

A redemption figure is the exact amount a borrower must pay to a lender on a specific date to fully repay, or redeem, an outstanding loan or mortgage. It includes the remaining principal balance, interest accrued up to that date, and any applicable fees, such as an early repayment charge, and is calculated to the day because interest continues to accrue until the debt is actually settled in full.

Redemption figures are requested most often when a borrower is selling the mortgaged property, switching the mortgage to a different lender through refinancing, or simply wants to clear the debt early for other financial reasons. Because the figure is time-sensitive, lenders typically provide it with an expiry date and a daily rate of additional interest that applies if payment is received after that date, meaning a redemption figure requested weeks before completion can become outdated by the time funds actually change hands.

If you want to pay off your mortgage completely, you cannot just look at your last statement, because interest keeps adding up every single day. The redemption figure is the lender's precise answer to the question "exactly how much do I need to send today, or by this specific date, to be completely done with this loan, right down to the last unit of currency?"

• The outstanding principal balance still owed on the loan as of the calculation date.
• Interest accrued since the last payment, calculated up to the stated redemption date rather than the previous statement date.
• Any early repayment charge, exit fee or administration fee the lender applies for closing the account ahead of its natural end.

A solicitor handling a property sale will request a payoff statement or redemption figure directly from the lender so that the mortgage can be cleared from the sale proceeds at closing, with any shortfall or surplus handled as part of the final settlement. Borrowers refinancing to a new lender request the same figure so the new lender knows exactly how much to send to clear the old loan as part of the switch, since sending too little would leave the original mortgage partially unpaid.

A redemption figure requested during a fixed-rate period will typically include a prepayment penalty if the loan's terms impose one, which can make early repayment considerably more expensive than the remaining balance alone would suggest. Borrowers considering paying off a loan early are generally advised to request a redemption figure well in advance of their intended payoff date specifically so they can weigh the exit charge against the interest savings before committing to the decision.

When several linked property transactions, sometimes called a chain, are completing on the same day, each seller's solicitor typically needs an up-to-date redemption figure confirmed close to the actual completion date, since any delay in the chain can push the payoff date past the figure's expiry and force a fresh request. A redemption figure that expires before funds are actually sent can result in a shortfall being passed back to the seller, which is why experienced solicitors build in a buffer and confirm the figure's validity date carefully against the expected completion date. Some lenders will issue an updated figure quickly on request if a chain slips by only a few days, while a longer delay may require a completely fresh redemption statement calculated from scratch against the new expected date.

A borrower with more than one loan secured against the same property, such as a primary mortgage and a separate home equity line, generally needs a separate redemption figure for each loan, since each is a distinct debt with its own balance, rate and potential exit charges. Coordinating redemption figures across multiple lenders adds a further layer of timing complexity to a sale or refinance, since every figure needs to remain valid on the same eventual completion date for the transaction to close smoothly.