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| What are Redemption Penalties?
Redemption Penalties are set by creditors in case the borrower decides to pay his loan before the agreed time. Of course the penalties defer from mortgage to mortgage and lender to lender. The Redemption Penalties is set to protect the lender so he ca recover his loss for giving the customer a deal which probably was under the market value.
The most common place where they us Redemption Penalties are with mortgages. The lenders give out deals to get more customer and to sell their real-estate. Now these deals are usually under market value and the lender would loose money if you would pay him before the agreed time. For this he has put up a penalty to protect his self and interests. Recently people are jumping from one good offer to the next. It's important for you as a borrower to read the contract where the Redemption Penalties should be clearly stated. | | | | |
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