Selling a house is a big decision that comes with many questions and concerns. One of the most common questions is whether you can sell a house with a mortgage. The answer is yes, you can sell a house with a mortgage. However, there are certain things that you need to keep in mind.
In this article, we will discuss everything you need to know about selling a house with a mortgage, what happens to your mortgage when you sell your house, porting your mortgage, paying off your existing mortgage loan, and more.
Understanding Mortgages in the UK

Before we explore the process of selling a house with a mortgage, it’s important to understand what a mortgage is and how it works in the UK. A mortgage is a loan that you take out to buy a property.
The lender uses the property as security for the loan, which means that if you don’t keep up with your mortgage payments, it may affect your credit score and ability to obtain credit in the future.
Mortgages in the UK typically have a term of 25 years, but this can vary depending on the lender and your individual circumstances. The amount you can borrow will depend on your income, credit history, and other factors. It’s important to shop around for the best mortgage deal and to seek professional advice to ensure that you understand the terms and conditions of the loan.
Selling a House with a Mortgage

If you’re thinking of selling your house with a mortgage in the UK, there are a few things you need to consider.
Determine the Payoff Amount
The first step is to determine the payoff amount, which is the amount you owe on your mortgage, including the principal balance, any interest that has accrued, and any fees or charges. You can find out the payoff amount by contacting your lender. Once you have this figure, you can calculate how much you’ll have left over after the sale.
Decide on the Selling Price
Next, you need to decide on the selling price. Setting a price that allows you to pay off the mortgage and have some money left over is essential. However, you should also consider closing costs, estate agent fees, early repayment charges on your existing mortgage deal, legal fees and other expenses associated with selling a house.
Hire an Estate Agent
Selling a house can be complicated, so it’s wise to hire a good independant estate agent. They can help you navigate the selling process well, ensure everything is done correctly, and provide guidance on preparing your home for sale, marketing it to potential buyers, and negotiating with buyers.
Prepare the House for Sale
Before you list your house on the market, you’ll need to prepare it for sale. This may involve cleaning, decluttering, and making repairs. You want to ensure your home is in good condition and looks its best to appeal to potential buyers. An estate agent can offer tips on how to improve the presentation of your property.

List the House for Sale
Once your home is ready, your estate agent will list it for sale. They will create a listing, take photographs, and market it to potential buyers. You should be prepared to negotiate with buyers and make concessions if necessary.
Accept an Offer
When you receive an offer on your house, you’ll need to review it and decide whether to accept it. If the offer is below your asking price, you may need to negotiate with the buyer to reach a mutually acceptable price. Once you’ve accepted an offer, the legal process of transferring ownership of the property will begin.
Finalise the Sale & Paying off The Mortgage

When you sell a house with a mortgage, you will need to pay off your mortgage loan.
When the sale is finalised, the proceeds of the sale will go towards paying off the outstanding debt on your mortgage loan. If there’s any money left over, you’ll receive it.
If you still owe a lump sum of money on your mortgage after the sale, you’ll need to pay off the remaining balance. This is called mortgage shortfall. Your estate agent and mortgage lender can provide you with guidance on how to do this.
Selling a House with Negative Equity

Negative equity is a situation where the value of your property’s market, is less than the amount you owe on your mortgage. If you find yourself in this situation and need to sell your house, you’ll need to come up with the difference between the sale price and the amount you owe on your mortgage., also known as mortgage shortfall. This can be a challenging situation, but there are options available to you.
One option is to sell your property through a short sale, which involves selling the property for less than the outstanding mortgage balance. This requires the agreement of your lender, who may agree to write off the difference or require you to repay the remaining balance over time.
It’s important to note that a short sale will have a negative impact on your credit score, and you may find it difficult to obtain credit in the future.
Another option is to wait until your property increases in value. This can take time, but it may be worth considering if you’re not in a hurry to sell. You can also speak to your mortgage lender to see if they offer any options to help you manage your negative equity.
Porting Your Mortgage vs Applying for a New One

If you’re selling your house and buying a new one, you may be wondering whether to port your existing mortgage or apply for a new one. Porting your current mortgage deal means transferring your existing mortgage to a new property, while applying for a new mortgage involves taking out a new loan to finance your new property.
Porting Your Mortgage
Porting your mortgage can be a good option if you’re happy with your current mortgage terms and interest rate. It can also be a good choice if you’re in the middle of a fixed-rate mortgage and want to avoid early repayment charges.
However, it’s important to note that porting your mortgage is not always possible. Your lender will need to assess your new property and ensure that it meets their lending criteria. They may also require you to undergo a new affordability assessment.
If you’re able to port your mortgage, you’ll need to pay a porting fee, which can range from a few hundred to a few thousand pounds. You may also need to increase down payment on your mortgage if the value of your new property is higher than your old one.
Applying for a New Mortgage

Applying for a new mortgage can be a good option if you’re looking for more flexibility, a lower interest rate, or a different type of mortgage, such as a fixed-rate or variable-rate mortgage. You’ll need to undergo a new affordability assessment and provide evidence of your income and outgoings.
One advantage of applying for a new mortgage is that you may be able to borrow more money if you need it. You’ll also have the option to switch to a different lender if you find a better deal.
It’s important to shop around for the best mortgage deal and seek professional advice from an independent mortgage broker or financial advisor. They can help you compare mortgage products and find the one that best suits your needs.
In summary, when you’re selling your house and buying a new one, you’ll need to decide whether to port your existing mortgage or apply for a new one. Porting your mortgage can be a good option if you’re happy with your current terms and interest rate, but applying for a new mortgage can give you more flexibility and a wider range of options.
It’s important to seek professional advice and shop around for the best deal.
Other Frequently Asked Questions

When you sell your house, the proceeds of the sale will go towards paying off your mortgage. If you still owe money on your mortgage after the sale, you’ll need to pay off the remaining balance.
Yes, you can sell your house if you’re in negative equity, but you’ll need to come up with the difference between the sale price and the amount you owe on your mortgage. This can be challenging, but there are options available, such as a short sale or waiting until your property increases in value.
Yes, you can sell your house if you still have a fixed-term mortgage, but you may need to pay an early repayment charge if you pay off your mortgage before the end of the fixed term.
Yes, you can sell your house if you have an interest-only mortgage, but you’ll need to pay off the outstanding balance of the loan when you sell your house.
Yes, you should inform your mortgage lender if you want to sell your house. They’ll need to provide you with a payoff amount and may have certain requirements you need to meet when selling your property.
A mortgage redemption statement is a document provided by your mortgage lender that details the amount you owe on your mortgage, including any fees and charges. You’ll need this document when selling your house to determine the amount you need to pay off your mortgage.
Yes, you can sell your house if you're in arrears on your mortgage, but you'll need to pay off the outstanding balance of your mortgage, including any arrears, when you sell your house.
Yes, you can sell your house if you have a second mortgage, but you'll need to pay off the outstanding balance of both mortgages when you sell your house.
Yes, you can sell your house if you're on a buy-to-let mortgage, but you may need to pay an early repayment charge if property sale made you pay off your mortgage before the end of the fixed term.
The time it takes to sell a house with a mortgage can vary depending on factors such as the local property market, the condition of your property, and the demand from potential buyers. On average, it takes around 2-3 months to sell a property in the UK, but it can take longer or shorter depending on the property market, property prices and other personal circumstances too.
Conclusion
In conclusion, selling a house with a mortgage is possible, but it requires some planning and preparation. You will need to determine the payoff amount, decide on the selling price, hire a an estate agent, prepare the house for sale, and negotiate with potential buyers.
If you’re considering selling your house and need help, the team at Frank Modern Estate Agents are here to help.