In relation to the redemption process, which statement about the daily rate is correct?

In relation to the redemption process, which statement about the daily rate is correct?

• A. It is not added to the redemption figure if redemption is not delayed
• B. It is added to the redemption figure immediately
• C. It applies only to fixed-rate mortgages
• D. It is a one-time fixed fee

Answer: (A)

The daily rate is the interest that accumulates on the outstanding balance for each day between you instructing redemption and the funds actually being paid out. If redemption happens promptly with no delay, there are no extra days to charge, so the daily rate isn’t added to the redemption figure. If there is a delay, the daily rate accrues daily and increases the amount due. It isn’t a fixed one-time fee, and it applies to the mortgage regardless of whether it’s fixed-rate or not.

The daily rate is the interest that accumulates on the outstanding balance for each day between you instructing redemption and the funds actually being paid out. If redemption happens promptly with no delay, there are no extra days to charge, so the daily rate isn’t added to the redemption figure. If there is a delay, the daily rate accrues daily and increases the amount due. It isn’t a fixed one-time fee, and it applies to the mortgage regardless of whether it’s fixed-rate or not.