Redemption - RPI
Redemption
This is the right of the mortgagor to recover mortgaged property on repayment of the loan and any interest due. This legally means that once you as the borrower have finished repaying the mortgage you took out, the property is yours and the lender has no further claim on it. If you pay of the mortgage ahead of schedule you may face a redemption penalty which compensates the lender for loss of interest.
Redemption Penalties
Charges paid to the lender in compensation for lost interest if you redeem your mortgage ahead of schedule. During a discount period you will be severely penalised if you try to switch to another product or mortgage provider. Penalties can be stepped just like discounts, and can be particularly severe within the first year. This is to ensure that the costs that the lender endures in setting up the mortgage are always covered. Penalties can be a fixed sum of money, though are often proportion of the loan. With cashback mortgages, you often have to repay the amount of money you received as cashback.
Redemption Penalty Overhang
This is where the redemption penalty continues beyond a fixed or capped rate period, effectively tying you in to the much higher variable rate for a period of time after the fixed or capped period. As a result you get stuck paying an uncompetitive rate that eats into the gains you may have made from having the fixed rate or capped ratein the first place.
Redemption Statement
The outstanding amount to be repaid on an existing mortgage. Redundancy insurance Another form of income protection, but one that does not cover any form of sickness, injury or disability. The purpose of this type of policy is to replace income lost through a short to medium term period of redundancy. It provides you with a monthly tax-free income to cover a portion of your lost earnings. It is often sold in conjunction with the accident, sickness and disability element of income protection policies, in which case it is known as Accident, Sickness and Unemployment (ASU).
Reinstatement Value
The cost of rebuilding your home should it be destroyed.
Remaining Term
The original loan term minus the number of payments made.
Repayment Vehicle
The means by which a mortgage loan's capital is repaid. Examples include endowments, ISAs and personal pensions.
Repo Rate
The Bank of England base rate.
Repossession
Usually occurs after a borrower seriously defaults on payments. The lender then legally evicts the borrower and usually auctions the property to recover losses.
Restructured Loan
A mortgage in which new terms are negotiated.
Retail Price Index (RPI)
An index of the average level of prices in the UK. Insurance companies often link contents insurance policies to it.
Retention
This relates to monies withheld by lenders until certain mortgage conditions are met. This will normally relate to repairs or improvements to the property that the lender is insisting on.
Retrieval Cost
The cost incurred to recover amounts or items.
Revisionary Bonus
A bonus paid annually on an endowment mortgage which is dependent on the performance of the investment fund you are using to repay your mortgage.
Right to Buy (RTB)
This is when a tenant living in a council-owned property purchases it at a discount, the size of which depends on the length of their tenancy.
RPI
An index of the average level of prices in the UK. Insurance companies often link contents insurance policies to it.