Mortgage Glossary Index

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Rebuilding cost
This is the recommended amount (assessed by your property valuation) that you should take out buildings insurance cover for.

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 balance
The amount of unpaid principal on a home loan.

Remaining term
The original loan term minus the number of payments made.

Remittance fee
A charge made by the lender for sending the mortgage funds to your solicitor when the purchase is just about to be completed

Remortgage
The process of switching your mortgage loan from one lender to another without necessarily moving house.

Repayment mortgage
Each month you will make a repayment to the mortgage lender. Part of this payment will go towards reducing the total amount of capital you owe and part of it will be an interest charge on the remaining balance of the mortgage. Unless interest rates change or your introductory offer period ends, you pay the same amount each month. When one of these things does happen, repayments are altered so that the loan is still repaid at the end of the specified term.

Repayment period
The period over which the borrower must repay the lender. 

Repayment plan
When a borrower falls behind in mortgage payments, many lenders will negotiate a repayment plan rather than go to court.

Repayment term
The period of time over which you will repay your mortgage to the lender.

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
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.

Reverse mortgage
A special type of loan available to equity-rich, older owners. Repayment is not necessary until the borrower sells the property or moves into a retirement community.

Review of rate
The interest rate you are charged can be reviewed either annually or on a monthly basis. This feature does not affect fixed rate mortgages during the fixed period, or capped rate products when the rate is above the cap level.

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.

RPI
An index of the average level of prices in the UK. Insurance companies often link contents insurance policies to it.