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When selling a house with a mortgage, you’ll need to decide whether to move your current mortgage to your new home, or take out a new deal. This guide explains how selling a house with a mortgage works and the key costs and risks to consider.
If you’re selling a house with a mortgage, these are the main steps you’ll need to follow.
Ask your lender for a mortgage redemption statement. This confirms how much you need to repay on completion, including any early repayment charge or exit fee.
You should also check whether your mortgage can be moved to a new property, this is known as porting.
Consider whether you should keep your existing mortgage deal and move it to your next home, or take out a new mortgage. The right option depends on costs, rates and whether you pass affordability checks.
Your solicitor will handle the legal sale, liaise with your lender and arrange repayment of the mortgage when the sale completes.
On completion day, your solicitor uses the sale proceeds to pay off the mortgage.
If you’re buying a new house and porting your mortgage, you’ll take out a new one with the same terms on your new home. If you’re taking out a new mortgage on your new property, you’ll start paying the new rate.
Find out more about your mortgage options by speaking to fee-free mortgage brokers L&C.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
Before putting your property on the market, it’s worth checking a few key points.
Request a mortgage redemption statement from your lender so you know exactly how much needs to be repaid, including any early repayment charge. Although, bear in mind these only usually last around 4 weeks.
Compare your mortgage balance with your property’s value. This helps you spot potential negative equity issues early.
When you sell a mortgaged property, the mortgage does not stay in place after completion.
On completion day:
There are two ways to sell a house with a mortgage:
Taking your mortgage deal to your new home when you move is called porting in the UK.
Porting involves paying off your existing mortgage and taking out a new one with the same terms on a new property. This allows you to keep your current interest rate and related product features.
It’s important to know that porting is the transfer of a mortgage deal – not a transfer of the loan. This means you will have to reapply for a new mortgage and meet the lender’s current lending criteria.
Your lender will reassess:
Bear in mind the lender’s criteria may have changed since you last applied for a mortgage.
Alternatively, you may wish to take out a new mortgage when you buy your new house.
You may do this if:
Seller tip: If you’re tied into a mortgage deal, it’s vital to find out if you’ll need to pay any mortgage fees like an early repayment charge if you leave the mortgage deal early. These can be as much as 5% of the outstanding loan amount.
Selling a house with a mortgage? Get fee-free expert advice on your mortgage options today.
There is no one-size-fits-all answer. But here are some factors to weigh up when you’re selling a house with a mortgage and deciding whether to port your mortgage or take out a new one.
| Factor | Porting your mortgage | Taking out a new mortgage |
| Mortgage rate | You’ll keep your current rate, which can be beneficial if it’s low. | You’ll move onto a new rate, which may be higher or lower. |
| Early repayment charges | Usually avoided, as long as the lender approves the move. | Often payable if you’re leaving a mortgage deal early. |
| Affordability checks | Full reassessment based on your current income and outgoings. | Full affordability and credit checks apply. |
| Borrowing more | Possible, but extra borrowing is usually on a separate rate. | All borrowing is combined into one new mortgage. |
In general, moving your mortgage may suit you if you’re on a low fixed rate with high exit fees, while taking out a new mortgage may be better if your mortgage deal is ending or your circumstances have changed.
Get fee free expert advice on your mortgage options today.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
Even if your mortgage is technically portable, your lender is not obliged to approve the move. Porting a mortgage still involves a full reassessment, and lenders can refuse for several reasons including:
There are a number of issues that you may face if you’re selling a house with a mortgage:
Firstly, don’t just use the valuation from one estate agent. Get valuations from at least three estate agents, as well as researching the market yourself. Read more in our guide How much can I sell my house for?
However, if you’ve done this process and the valuation is still lower than expected, you’ll need to decide whether to proceed with the sale with this lower valuation and whether you can still afford your onward purchase.
If the sale price doesn’t cover your mortgage, this is called negative equity. Selling a house with negative equity is possible but only if your mortgage lender agrees to it.
Your lender may agree to the sale, particularly if your home might otherwise be repossessed. However, there may be specific requirements, such as using an approved agent to sell the property and needing to provide the lender with evidence of the market value.
Selling a house with negative equity is rarely advised and is usually only a last resort. Not only will you lose the deposit you paid but you will also owe your lender money. So you should seek professional advice such as from Citizens Advice and National Debtline.
Mortgage redemption statements are generally valid for about 4 weeks, although this can vary.
Asking for a redemption statement early and then keeping it updated can help avoid last-minute delays.
The cost of selling a house with a mortgage can vary, but may include:
Get more details on how this all works in our guide on mortgage fees and costs.
Selling a house with a mortgage? Find out your options by speaking to a fee-free mortgage broker.
Get fee free mortgage advice from our partners at L&C. Use the online mortgage finder or speak to an advisor today.
In addition to mortgage fees, there are estate agent, legal fees and removal costs to plan for. Use our cost of moving calculator to get an idea of the costs to plan for.
Before listing your property:
Before completion:
There are 6.5 million homes owned with a mortgage or a loan in England alone according to the most recent ONS data, so as a result, selling a house with a mortgage is very common.
When selling a house with a mortgage, your conveyancing solicitor repays the mortgage directly to your lender on completion. You do not need to arrange this yourself.
If you’re selling a house with a mortgage in the UK, most lenders will require you to have been living in it for at least 6 months before you can sell.
Yes, you can sell a house with a mortgage at any time (although there may be restrictions in the first 6 months of ownership). However, if you sell while you are tied into a mortgage deal, you may have to pay an early repayment charge. These charges can be significant, so it’s important to check your mortgage terms before putting your home on the market.
You do not usually need your lender’s permission to sell your home. However, your lender must be repaid in full when the sale completes, or approve moving your mortgage to a new property if you plan to do so. Your conveyancing solicitor will handle this process as part of the sale.
HomeOwners Alliance Ltd is registered in England, company number 07861605. Information provided on HomeOwners Alliance is not intended as a recommendation or financial advice.
Mortgage service provided by London & Country Mortgages (L&C), Unit 26 (2.06), Newark Works, 2 Foundry Lane, Bath BA2 3GZ, authorised and regulated by the Financial Conduct Authority (FRN: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
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Independent Financial Adviser service is provided by Unbiased, who match you to a fully regulated, independent financial adviser, with no charge to you for the referral.
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