Selling a House With a Mortgage

Looking at how to sell a house with a mortgage, the pros and cons of selling with a mortgage, and how we can help…

Alexandra Ventress ★ Digital Content Writer

When it comes to selling your house, you can often be left with a lot of questions, especially when it comes to selling a property with a mortgage. You can be left confused about your selling options, whether or not you should port your mortgage, and what the ups and downs of selling with a mortgage can be.

In this blog post, we will be looking at your options when it comes to selling a house with a mortgage, what porting your mortgage involves, and how you can sell your house with a mortgage in as little as 28 days…

Looking for a quick answer? Check out our interactive menu to the side.

Can I sell a house with a mortgage?

Of course! You can sell your home at any time as long as you can afford to pay off your remaining mortgage balance. Or alternatively, if you like you can transfer your existing mortgage to a new house.

If you are planning to sell your property in order to free up some cash but not purchase another property straight away, then you should make sure that the sale price is higher than your existing mortgage. This should be including any fees that you have to pay, such as early repayment charges.

Can I transfer my mortgage to another property?

Yes, you can! This process is referred to as porting and involves porting your current deal to a new property, rather than taking out a new mortgage. Porting a mortgage is a popular choice as it can often save homeowners a lot of money, especially if they are in the early repayment charges window or they have a favourable fixed rate. It also has the added advantage of being much less hassle than starting a new application with a different mortgage company.

When should you port a mortgage?

The circumstances for when you should port a mortgage vary from person to person. But as a rule of thumb if one of the following criteria applies to you, then porting your mortgage may be an avenue you wish to explore:

If you have had your property valued and it will not cover the mortgage debts, but you are comfortably paying off your mortgage payments each month.
If you are comfortable with your current mortgage deal and don’t wish to make any changes
If you are no longer in your mortgage initial deal term as you will no longer have to pay early repayment charges

How do you port your mortgage?

In order to port your mortgage, you will need to fill out an application form. This is because you will not be transferring the deal itself, but the terms and conditions of the mortgage. As long as you are not decreasing or increasing the loan amount, you should not have to pay any fees for porting a mortgage.

Whilst many mortgages are portable, it is worth bearing in mind that this is not the case every time. Your personal circumstances as well as the property itself will determine whether you are eligible for porting.

What to consider before selling a house with a mortgage

When it comes to selling a house before you pay off the mortgage, there are a few elements you will need to consider before you put your current home on the market and buy another property. These include:

Once you have sold your home, if the amount you get from the sale is not enough to pay off your mortgage, then you will need to continue making payments to your lender until you have repaid your mortgage in full.
Until the property has been sold, you will be responsible for all mortgage repayments, insurance and other household costs.
If you plan on redeeming your existing mortgage (paying back the full amount) and not buying a new property you must ensure that the sale price is more than what is left on your mortgage
Once you have sold your home you will need to think about your personal financial situation. If you are out of employment at the time when you sell your house and you receive a cash lump sum from the sale of the property, then this can have an effect on whether or not you will receive your benefits.
If you owe more money than your property is worth, then you are described as being in negative equity. If this applies to you, then you may need to think about other options other than selling, as it may not be a viable option for you.
Once the sale is complete, your existing mortgage loan will need to be repaid by your solicitor or conveyancer.

Additional costs for selling a house before the mortgage is paid

Other costs that you should be wary of when selling your house with an existing mortgage include:

Early Repayment Charges

An early repayment charge is a fee that you can incur when you wish to end your mortgage deal before the ‘official’ deal term ends.

An example of this would be if you were on a 3-year fixed rate deal with your lender but after 12 months you decided you wanted to move to a lower fixed-rate, you would end up facing an early repayment charge.

Because your lender expects to make a certain amount of interest by lending you the money for your mortgage, when you switch or pay off the debt early, they loose money. This is why you may end up facing an early repayment charge.

Estate Agent Fees

When it comes to selling your property with a morgage, you can expect your estate agent fees to range anywhere from 0.9% – 3.6%. This fee will depend on the agent you use, the property itself, and how sucessfully you negotiate.

In the UK, if you sell with your average high street ‘no sale no fee’ agent, you can be facing fees of around 1.42%+VAT. This means if you have a property that is valued at £285,000, you can expect to add around £4,000 to your house selkling costs.

What are early repayment charges?

Early repayment charges are a fee that you may incur if you wish to end your mortgage before the deal term has officially ended. They are charged as the lender expects to make a certain amount of interest by lending you the money for your mortgage on a fixed or tracker rate mortgage. If you decide to switch or pay the debt off early, they will lose money, which is why you are then facing an early repayment charge.

If you are a homeowner who is paying their lender’s standard variable rate (SVR) then early repayment charges should not be a concern for you.

Pros and cons of selling your house before your mortgage is paid off

As with any house-selling situation, there are pros and cons to selling your property before the mortgage term is over. Below we take a look at some of the pros and cons of selling your property before the mortgage is paid off:

Pros

If you have had a change of circumstances and your current property is no longer affordable, you may be able to get a more affordable mortgage on a cheaper property.
If you have your property evaluated and it is high enough to cover your mortgage debt, then you will be able to pay off your debts.
If you have found yourself in the position of falling behind on your mortgage payments, can stop the repossession of your property by selling it and then settling the mortgage debt.
Once you have sold your property, you may be left with some spare cash to put towards your new property.

Cons

When you sell your home, you may find yourself becoming homeless temporarily.
If you cannot afford to pay your mortgage lender, then you may find yourself in a mortgage shortfall. This can be costly and stressful, and if you don’t make your payments, then you may end up facing legal action.
If you purchase a new property, you will still be responsible for the mortgage payments on your old property until it is sold.
You can find yourself in the situation of having to secure a short sale with your bank. This means that your old home will be sold for less than you originally bought it for.
If your property valuation comes back lower than expected then you won’t have enough to cover your original mortgage deal, which will make paying your remaining payments difficult.

Where can I sell my house with a mortgage?”

The majority of homeowners on the open market, unfortunately, do not have the borrowing power to be able to take out two mortgages at the same time. So if you find your dream house on the open market but yours is yet to sell, what can you do? When taking out a loan or porting your mortgage is not an option, how can you purchase your dream home?

Thankfully, you have several options to ensure that you do not miss out on your house purchase.

Property Auctions

Property auctions are becoming an increasingly popular method of selling properties. The seller agrees on a minimum reserve price that must be met for the property to sell. The hope is that the minimum reserve price will be met and that potential buyers will keep bidding, raising the total profit. The main advantage of selling through this method is that auctions tend to attract serious buyers. As winning bids are legally binding once the gavel falls, the buyer cannot pull out without severe financial consequences.

The downside to selling through a property auction is that they are not the swiftest selling option. Once you have listed your property for sale, you will have to wait for the next auction which could be weeks or months away. Even after the auction is complete, you will still need to wait for the paperwork to go through which can add an additional month or more to the process. Furthermore, selling at an auction is not without cost. Auctioneers, like estate agents, charge a commission to cover the costs of marketing and selling your home.

Bridging Loans

Another option for selling your home is taking out a bridging loan. These loans help to bridge the gap between buying and selling a property. They are usually short-term loans however they come with higher borrowing costs.

The Property Selling Company

Another way you can quickly sell your property in order to buy the home of your dreams is through an online estate agent like ourselves.

Here at The Property Selling company, we believe that selling a house should be three things: fast, effortless, and free. That’s why we can sell your property in as little as 28 days, without the estate agent fees!

We offer you a full online estate agent service – because it’s our mission to change the way you sell houses. Gone are the day of estate agent fees eating away at your total profit.

We will be working alongside you every step of the house-selling process, covering everything, so you won’t have to. The days of expensive solicitor fees and legal work are over, and our team of property experts will continue to be there, even after the process is complete.

We will market your property on popular property portals such as Rightmove and Zoopla, organise viewings, cover legal fees, and negotiate better deals all for free!

If you are ready to sell your home in as little as 28 days, then get in touch today and fill out one of our fast, free, no-obligation forms for your house valuation today!