Mortgage Redemption Figure Explained

If you are selling a property with a mortgage, one of the most important numbers in the entire transaction is the mortgage redemption figure. This is the amount your lender requires to close your mortgage account in full, and it determines how much of the sale price you actually keep. Yet many sellers confuse it with the balance shown on their lender's app or annual statement -- and the difference can be significant.

This guide explains what a redemption figure is, how it differs from your outstanding balance, what charges it includes, and how the process works when you sell. Whether you are early in the planning stage or already have a buyer, understanding your redemption figure helps you calculate your true net proceeds and avoid surprises on completion day.

What is a mortgage redemption figure?

A mortgage redemption figure (sometimes called a settlement figure or payoff figure) is the total amount you must pay your lender to repay your mortgage in full and close the account. Your lender provides this figure on a formal document called a redemption statement, which sets out each component of the amount owed.

The redemption figure is date-specific. Because your lender calculates interest on a daily basis, the amount you owe changes every day. A redemption statement issued today will show a different figure from one issued next week, even if you make no additional payments in between. This is why redemption statements are only valid for a limited period -- typically 14 to 30 days.

When you sell your home, your solicitor requests the redemption statement from your lender as a standard part of the conveyancing process. On completion day, the redemption amount is paid directly to your lender from the sale proceeds before you receive the balance.

Redemption figure vs outstanding balance: what is the difference?

The balance you see when you log into your lender's online portal or on your annual mortgage statement is the outstanding capital balance. This is the amount of principal you still owe, calculated as at a specific date (usually your last payment date). It does not include several additional costs that form part of the redemption figure.

Here is a breakdown of how the two figures differ:

For a seller with £180,000 outstanding on a mortgage at 4.5% interest, the daily interest alone is roughly £22.19 per day. If the redemption date is 20 days after your last payment, that adds approximately £444 in accrued interest. Add a £150 exit fee and the redemption figure is already nearly £600 more than the balance on your app. If an early repayment charge applies, the gap can be thousands of pounds.

This is why you should never use your online balance to estimate your net proceeds. Always request a formal redemption statement for accurate figures.

What does the redemption figure include?

A mortgage redemption figure typically includes four main components. Understanding each one helps you anticipate the total cost and spot any errors on the statement.

1. Outstanding capital balance

This is the principal amount you still owe on the mortgage -- the portion of the original loan that has not yet been repaid through your monthly payments. On a repayment mortgage, this decreases with every payment. On an interest-only mortgage, the capital balance remains unchanged (or close to it) throughout the term.

2. Accrued daily interest

Your lender charges interest every day on the outstanding balance. The redemption statement calculates interest from the date of your last monthly payment up to the stated redemption date. This is why the figure is date-specific: each additional day adds another day's interest.

To estimate your daily interest cost, multiply your outstanding balance by your interest rate and divide by 365. For example:

These figures illustrate why delays in completion can have a tangible financial impact. Every day the sale slips adds to your redemption figure and reduces your net proceeds.

3. Early repayment charge (ERC)

If you are still within a fixed-rate, discounted-rate, or tracker deal period, your lender will apply an early repayment charge when you redeem the mortgage. ERCs typically range from 1% to 5% of the outstanding balance and decrease each year as you approach the end of the deal. For example, a five-year fixed-rate mortgage might carry a 5% ERC in year one, reducing to 1% in year five.

On a £200,000 mortgage, a 3% ERC would add £6,000 to your redemption figure. This is often the single largest additional cost sellers face, and it comes directly off your sale proceeds. Once your deal period has ended and you have moved onto the lender's standard variable rate (SVR), there is no ERC to pay.

If your deal is due to end within a few months, it may be worth timing your sale so that completion falls after the ERC window closes. Our guide on selling with an outstanding mortgage covers strategies for managing this.

4. Mortgage exit fee

The mortgage exit fee (sometimes called a deeds release fee or account closure fee) is an administrative charge your lender applies for closing the mortgage account and releasing their legal charge over the property. It typically costs £50 to £300 and applies regardless of whether you are within a deal period or on the SVR. Almost all lenders charge this fee, and it is deducted from your sale proceeds on completion day.

How to request a redemption statement

You can request a redemption statement at any time, and you do not need to give your lender a reason. Under FCA rules (MCOB), your lender must provide one within a reasonable timeframe. There are three main ways to request it:

1. Call your lender's customer service line. This is usually the fastest method. Ask specifically for a "mortgage redemption statement" and specify the date you want it calculated for (ideally your expected completion date).
2. Use the online portal. Many lenders allow you to request a redemption statement through their website or app. The statement is typically generated within a few working days and posted to you or made available to download.
3. Write to your lender. A formal written request works but is slower. This may be necessary if your mortgage is with a smaller building society or specialist lender without a digital portal.

Most lenders issue the statement within five to ten working days of the request. Your solicitor will also request one during conveyancing, but getting your own copy early in the process is strongly recommended. It allows you to calculate your approximate net proceeds before accepting an offer and ensures there are no surprises about early repayment charges or other fees.

Timing: when is the redemption figure needed during a sale?

The redemption figure plays a role at several points during the sales process. Here is when it matters most:

• Before listing: Requesting an early redemption statement helps you understand your equity position and calculate how much you will keep after the sale. This is particularly important if an ERC applies, as it may influence when you choose to sell.
• After accepting an offer: Your solicitor requests a formal redemption statement from your lender as part of the conveyancing process. The figure is used to prepare your completion statement.
• Before exchange of contracts: Your solicitor provides a professional undertaking to the buyer's solicitor, confirming that the mortgage will be redeemed from the sale proceeds on completion day. The undertaking relies on the redemption figure being available.
• A few days before completion: Your solicitor verifies that the redemption statement is still valid for the completion date. If the date has changed, they request an updated statement.
• On completion day: Your solicitor sends the redemption amount to your lender via CHAPS bank transfer. The lender then releases their charge over the property.

How your solicitor handles the redemption

The mortgage redemption process is a standard part of conveyancing, and your solicitor manages it from start to finish. Here is what they do:

1. Request the redemption statement from your lender, specifying the anticipated completion date.
2. Review the statement for accuracy, checking the capital balance, interest calculation, ERC, and exit fee.
3. Include the figure in your completion statement, which itemises all deductions from the sale price and shows your net proceeds.
4. Provide an undertaking to the buyer's solicitor confirming that the mortgage will be redeemed on completion day. This is a legally binding promise.
5. Pay the lender on completion day using funds received from the buyer's solicitor. The payment is made via CHAPS bank transfer and is the solicitor's top priority.
6. Confirm discharge once the lender releases the charge. The buyer's solicitor then arranges for HM Land Registry to remove the charge from the title register.

Your solicitor is personally liable for fulfilling the undertaking, which is why the mortgage redemption is always paid before any other deductions on completion day. For a full overview of what solicitors charge for selling, including how redemption work is factored into their fee, see our dedicated guide.

Impact on your net sale proceeds

The redemption figure is usually the single largest deduction from the sale price. Understanding its impact helps you set realistic expectations about what you will receive. Here is a worked example:

In this example, the seller receives £124,893 from a £310,000 sale. Without the early repayment charge, the net proceeds would be £128,393 -- a difference of £3,500. Without any of the mortgage-related charges (interest, exit fee, ERC), the seller would keep £132,388. These figures demonstrate why checking your redemption statement early is essential for accurate budgeting. For a comprehensive overview of every selling cost, see our guide to the hidden costs of selling a house.

What happens on completion day

On completion day, the buyer's solicitor sends the full purchase price to your solicitor by CHAPS bank transfer. Your solicitor then distributes the funds according to the completion statement:

1. The mortgage lender is paid first. Your solicitor sends the full redemption amount (capital, daily interest, exit fee, and any ERC) to your lender via CHAPS. This is the solicitor's top priority because they gave an undertaking to the buyer's solicitor that the charge would be cleared.
2. The estate agent receives their commission. Most agency agreements provide for the solicitor to pay the agent directly from the proceeds.
3. The solicitor deducts their own fees and disbursements.
4. The remaining balance is transferred to you. Your net proceeds are sent to your bank account, usually arriving the same day or the next working day.

Once your lender receives the redemption payment, they confirm discharge of the mortgage and release their charge over the property. This discharge process typically takes five to twenty working days. The buyer's solicitor then submits a DS1 form (or an electronic ED discharge) to HM Land Registry to remove the charge from the title register. By this point, you have already received your proceeds and moved on.

Common questions about redemption figures

Can I reduce my redemption figure before selling?

Yes, in certain cases. Making additional capital payments before listing can reduce both the outstanding balance and the daily interest accruing on it. However, check your mortgage terms first -- most lenders allow overpayments of up to 10% of the balance per year without triggering an early repayment charge, but exceeding that threshold could incur an ERC on the excess amount. If your deal period is ending soon, the most effective strategy is often to wait until the ERC window closes.

What if I have more than one mortgage on the property?

If you have a second charge mortgage, a secured loan, or a Help to Buy equity loan, each charge must be redeemed on completion day. Your solicitor will request separate redemption statements from every lender with a charge on your property. The charges are paid in order of priority: the first charge (your main mortgage) is paid first, followed by any second or subsequent charges. All redemptions will appear on your completion statement.

What if I cannot find my mortgage account details?

Your solicitor can identify which lenders hold charges against your property by ordering official copies of the title register from HM Land Registry. The charges register section of the title shows every legal charge on the property, including the lender's name and the date the charge was registered. This can be useful if you are unsure which lender holds your mortgage or whether there are any charges you have forgotten about.

How Pine helps you prepare

Understanding your redemption figure is one of the first steps in calculating your true net proceeds from a sale. Pine helps sellers get their legal preparation done before a buyer is even found. By completing your TA6 and TA10 property information forms with AI guidance, ordering property searches at near-trade prices, and building a solicitor-ready legal pack early, you can reduce the time between accepting an offer and reaching completion. The shorter that window, the less daily interest accrues on your mortgage, and the lower your final redemption figure.

Sources and further reading

• Mortgages and Home Finance: Conduct of Business Sourcebook (MCOB) (FCA Handbook)
• Mortgages -- Information for Consumers (Financial Conduct Authority)
• Moving Home with a Mortgage (MoneyHelper)
• How Much Does It Cost to Sell a House? (Which?)
• Search Property Information at HM Land Registry (GOV.UK)
• Conveyancing Protocol (The Law Society)

Related guides

• Mortgage Exit Fees Explained

Frequently asked questions