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How to Sell a House With a Mortgage: A Simple Guide for UK

Selling your house when you still have a mortgage needn’t be stressful or complicated. Thousands complete the process every year by getting paperwork in order, sticking to the key steps, and keeping the lender informed. Even better, there are different ways to sell your mortgaged home, and in this guide, we look at what’s involved to help you make the right decision. 

Can you sell a house with a mortgage?

Absolutely! You can sell a property even if you still have outstanding mortgage payments. Many people sell with a mortgage in place, and you’ll need to pay off any leftover balance when the sale is completed, either using the sale proceeds or your own funds.

Provided that the property achieves a sale price greater than the amount left on the mortgage, and your lender gives the go-ahead (this is usually given as standard from the lender), selling with a mortgage is usually a very common and straightforward process. 

Do I need to tell my mortgage lender that I’m selling my house?

Yes, you’ll need to notify your mortgage lender when putting your property on the market. They need notice to provide early repayment statements, process fees, and prepare exit documents for the current deal. 

The lender can also provide guidance on the selling process and implications for your finances. Discuss your existing mortgage balance with them, as well as the possibility of penalties applying to an early repayment. You may also decide to transfer your existing mortgage (more on that shortly). 

Keeping your lender informed means the conveyancing and any remortgaging process goes more smoothly if you’re also buying a new property. Maintaining open communication with your mortgage provider ensures selling the house is as stress-free as possible.

What happens to my mortgage when I sell my home?

When you sell your mortgaged home, the existing mortgage agreement will need to be discharged. This means it’s paid off and closed. You will have to settle your remaining mortgage amount in full from the proceeds of the property sale. If any funds remain after the mortgage company has been paid, these proceeds belong to you. 

If the sale proceeds do not fully cover the entire outstanding mortgage, you will need to pay the shortfall using your own funds before the sale can be completed and ownership can be transferred to the buyer. 

Your conveyancer will manage this mortgage repayment and discharge process on your behalf, submitting the necessary funds to your lender and securing the discharge paperwork.

Can I transfer my mortgage to another property?

If you are selling your current mortgaged home and planning to purchase another property, you may wish to transfer your existing mortgage. This is also known as porting the mortgage and means moving it from your current home to your new one. 

Whether this is possible depends on your lender and the mortgage terms, so you would need to contact them to discuss your eligibility. It can save time and fees over taking out a brand-new mortgage.

If you’d like to transfer, your current mortgage will need to be discharged when you sell, and then that same amount can be redrawn against your new property purchase. This is arranged with your lender, and the new property is then mortgaged to the same level as your old property. 

You may be able to borrow more if needed, depending on whether you meet affordability criteria. 

Your lender will complete a full assessment for affordability and may reassess interest rates, though these often get transferred, too.

Should I transfer my mortgage or pay it off?

Whether you decide to transfer your mortgage or pay it off when selling the property really depends on whether you move to a new home or not. If you are moving, your current rate versus new rates, as well as any early repayment penalties, also come into play. 

If your existing mortgage deal has a lower rate than what’s available now, keeping that rate by transferring the mortgage to your new property makes financial sense and saves money in the long term. 

Equally, if repaying early triggers repayment charges, then it is often better value to port at the rate of your current mortgage instead. Check the numbers on both options — if penalties make the option of an early payout expensive, then porting may be the smarter move.

How long do you have to have a mortgage before you can sell?

Generally speaking, there is no minimum time period that you must have had a mortgage before selling your property (although you should always check with the lender). You can usually put your house on the market and sell it even if you’ve only had the mortgage for a few months or weeks. Similarly, there are no specific legal obligations around the length of mortgage ownership. 

The key factors to consider are more pragmatic — again, think about any early repayment charges detailed in your mortgage contract, and also look at your equity. If you haven’t built anything up, you’re unlikely to make any profit from the property sale. Beyond checking the early repayment position, you can sell a mortgaged property at any point your circumstances require or allow you to.

What should I consider when selling my house with a mortgage?

Several key points should influence your decision on selling your mortgaged property. Ideally, the sales price will clear your outstanding mortgage — if not, you remain liable for the remaining amount. 

Consider lost income protections too. For instance, if you have lost your job, sale proceeds may affect any benefit claims you plan on making. Equally, weigh up timelines, as a rushed sale could mean accepting less but reduces the mortgage fees paid.

Analyse your equity position as negative equity, where the mortgage exceeds the property’s value, which means selling makes little sense financially. On the flip side, if you are mortgage-free after selling with no new onward purchase, a higher sale price offers greater proceeds. 

While needing to move home may dictate your decision, reviewing finances, penalties, equity and income helps determine if selling now is advantageous or if waiting until you’ve paid off more of the mortgage and property value has increased may give a better outcome.

How can I sell my home with a mortgage?

Selling a property with an outstanding mortgage requires careful planning, regardless of the method you use. When considering how best to sell your mortgaged home, two of the most common options are via a traditional high street estate agent or alternatively at auction.

Using a traditional estate agent

The traditional route gives you time to find the right buyer. However, it also means potentially lengthy marketing periods and uncertainty over whether your house gets sold. You remain liable for the mortgage payments throughout.

Auction sale

Auction provides speed, but means less control over the final selling price and no certainty of a sale. Auctions also come with fees and strict payment deadlines for the buyer.

While both traditional methods have pros and cons, anyone needing a guaranteed, quick sale without the fuss should consider using a cash-buying company like Property Rescue.

Property Rescue

Selling your mortgaged home with Property Rescue offers a faster, hassle-free process that guarantees a quick cash release. We handle legal fees and offer a sale solution irrespective of property condition, which is ideal for anyone needing swift financial resolution or avoiding property market fluctuations.

It’s a practical choice for urgent property sales, and we can buy your home in as little as 48 hours.

If you’re curious about exploring the Property Rescue solution a bit more, start off by getting a free, no-obligation cash offer for your home and you’ll be able to decide what to do from there.


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