Can I Sell a House with a Mortgage

Yes, you can sell a house with a mortgage in the UK. In fact, it is a common situation, as most homeowners sell their property before fully repaying their mortgage. The key requirement is that the sale proceeds must be sufficient to pay off the outstanding mortgage debt in full at the time of completion. This is usually handled by your solicitor or conveyancer, who arranges for the mortgage to be redeemed and the property to be legally transferred to the buyer.

Selling a house with a mortgage is a standard process within the property market, and lenders are fully prepared for it. As long as your sale price is enough to clear what you owe, there are usually no issues. However, there are a few things to understand before starting the process.

How the Process Works

When you accept an offer on your home, your solicitor will request a redemption statement from your mortgage lender. This shows the exact amount needed to repay the mortgage on a specific date. The lender will place a legal charge on your property, which is removed once the loan is settled.

At completion, the buyer’s funds are transferred to your solicitor, who uses them to pay off the mortgage and any other secured loans. The remaining balance is passed to you, minus legal fees and any estate agent commission.

Once the mortgage is paid off, your lender will confirm the account is closed, and the legal charge is removed from the property’s title at HM Land Registry. This allows the buyer to take ownership with a clear title.

What If the Sale Price Is Less Than the Mortgage?

If the sale price is not enough to repay your mortgage in full, this results in what is known as negative equity. In this case, you will need to pay the difference using savings or a separate loan. Lenders are not usually willing to allow the sale unless the full mortgage can be repaid.

If you are in negative equity and cannot afford to cover the shortfall, you will need to speak to your lender before listing the property. In rare cases, lenders may agree to a voluntary sale at a loss, but this usually requires evidence of financial hardship and a formal agreement.

Can You Port Your Mortgage?

Some mortgages are portable, meaning you can transfer them to a new property when you move. This allows you to keep your current interest rate and avoid early repayment charges. However, porting is not automatic. You will still need to apply for a new mortgage offer, pass affordability checks and ensure the new property meets the lender’s criteria.

Porting can be helpful if you are mid-way through a fixed-rate deal and want to avoid fees. If successful, your mortgage is paid off on your current home and reissued on the new one at the same rate.

Early Repayment Charges and Fees

If you are on a fixed or discounted mortgage deal, selling your home early may trigger an early repayment charge (ERC). This is a fee for ending your mortgage before the agreed term, usually a percentage of the remaining balance.

You should check your mortgage agreement or ask your lender for details of any charges. Some lenders allow a portion of the mortgage to be repaid early without penalty, or the charge may reduce as the deal progresses. Your solicitor will include any ERCs in the final redemption figure.

Other possible fees include a mortgage exit fee, usually a few hundred pounds, which is charged when closing your account.

Involving Your Lender Early

It is a good idea to contact your lender as soon as you decide to sell. They can explain your redemption figure, any penalties and options for porting your mortgage if needed. Having this information early can help you decide on pricing, affordability and timing.

If you are also buying another property, your solicitor can handle both transactions together, making sure the mortgage on your current property is paid off and any new loan is arranged on time.

Conclusion

Selling a house with a mortgage is a routine part of the UK property process. As long as the sale proceeds cover the outstanding mortgage and any fees, you can go ahead without issue. If your mortgage is portable, you may be able to transfer it to a new home. If you are in negative equity or facing early repayment charges, it is important to speak to your lender early to understand your options and avoid delays.