You can sell a house that still has a mortgage: on completion day your solicitor or conveyancer uses the sale money to pay off your lender, and you receive whatever is left. GOV.UK sets out the order. Once contracts are exchanged and the buyer’s money arrives, your legal representative pays off the mortgage, any other debts secured on your home, the agent’s fees and their own fees, then sends the balance to your account.
The same principle applies in Scotland, where mygov.scot explains that the loan must be repaid before anyone else can own your home and that your solicitor arranges this. What changes from one seller to the next is how much is owed, what it costs to leave your mortgage early, and whether the sale price covers it all.
How is the mortgage paid off when you sell?
Your lender has a legal charge over your home, which is its security for the loan. The buyer will not complete unless that charge is cleared. So, on completion day:
- The buyer’s solicitor sends the purchase money to your solicitor.
- Your solicitor sends the lender the exact redemption amount.
- The lender releases its charge, and the buyer’s solicitor registers the new owner.
- Your solicitor pays any other secured loans and agreed fees, and sends you the balance.
The Law Society’s completion information form, the TA13, is how your solicitor confirms these arrangements to the buyer’s solicitor, including how your mortgage will be discharged.
What is a redemption statement?
A redemption statement is your lender’s written figure for the amount needed to clear your mortgage on a particular date. It includes the outstanding balance, interest up to that date, and any charges for leaving the mortgage, such as an early repayment charge or exit fee. MoneyHelper explains that the final amount is calculated to the day of completion.
Your solicitor will usually request the statement. It is still worth asking your lender for an estimate as soon as you think about selling. mygov.scot suggests checking with your lender how much is needed to pay off your loan before you put your home up for sale, and the same makes sense everywhere. It tells you the lowest price that would clear your mortgage, which is essential if you are considering a below-market offer.
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Will you have to pay an early repayment charge?
You might. MoneyHelper explains that you may owe an early repayment charge (ERC) or an exit fee if you leave a mortgage before the end of its deal. MoneyHelper suggests digging out your mortgage paperwork to check for both, and asking your lender if you cannot find the details. GOV.UK also advises contacting your lender to check for early repayment charges before you sell.
The amount depends on your deal, so do not guess. Ask your lender how the charge is worked out, whether it falls over time, and when your current deal ends. If the deal ends soon, the timing of your sale could make a real difference.
Can you take your mortgage with you?
Often, yes. Moving a mortgage to a new property is called porting. MoneyHelper says most mortgages are now portable, but moving is still treated as a new mortgage application, so you need to pass the lender’s affordability checks and other criteria.
Two points catch people out. First, porting usually needs to happen at the same time as your sale and purchase to avoid early repayment charges, so timing matters. Second, only your existing balance stays on the current deal. If you need to borrow more, the extra amount may be on a separate deal with its own fees. If you are selling without buying straight away, porting may not be possible, so ask your lender. Our guide to buying before selling looks at the timing questions.
What if you owe more than your home is worth?
That is negative equity. MoneyHelper defines it as owing your lender more than your property is worth, most commonly because prices have fallen. People with interest-only mortgages are more at risk, because their payments do not reduce the debt.
A simple illustration, using made-up round numbers: if you owe £180,000 and your home would sell for £170,000, there is a £10,000 shortfall before any fees or charges. A below-market sale to a cash buyer would make that gap larger. That is why it is so important to know your redemption figure before considering any offer.
MoneyHelper explains that unless you have savings to cover the difference, you will need to find a way to pay the shortfall to your lender. Its guidance is to talk to your lender first. If you have to sell and the shortfall could leave you in debt, get free debt advice straight away. A very small number of lenders offer negative equity mortgages that let you move the shortfall to a new home, but MoneyHelper warns these often have higher interest rates.
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What if you are behind with your payments?
Speak to your lender as soon as you can and keep paying what you can. MoneyHelper notes that lenders have to consider a request to change the way you pay, and one option might be extending the mortgage term to reduce your monthly payments.
Free, confidential help is available from MoneyHelper, Citizens Advice, StepChange and National Debtline. For housing advice, contact Shelter in England, Shelter Cymru in Wales, Shelter Scotland, or Housing Rights in Northern Ireland. Our pages on facing repossession and selling because of financial difficulty explain your options.
Be careful if anyone suggests selling to them and renting your home back. Sale and rent back is regulated by the FCA and carries serious risks. Our guide to sale and rent back explains why.
How does a mortgage affect a quick sale?
A cash buyer does not need a mortgage, which removes a common delay on their side. Your mortgage still has to be redeemed on completion, so ask for your redemption figure early. Tell your solicitor about any second charge or secured loan too, because GOV.UK notes these are paid from the sale money as well.
Then compare like with like. An offer is only workable if it covers your redemption amount, any early repayment charge, any secured loans and your legal costs, and leaves you enough for your next home. Our guide to how much cash house buyers pay explains why offers are below market value, and how to check an offer against agents’ valuations.
If you know your figures and want to see what vetted cash buyers on our panel might offer, you can get offers for my home. It is free, with no obligation to accept, and we never charge homeowners.
Common questions
Can I sell my house if I still have a mortgage?
Yes. Most sellers do. On completion day your solicitor or conveyancer uses the buyer's money to pay off your mortgage and any other loans secured on the home, deducts the agreed fees, and sends you what is left.
Who asks my lender for the redemption figure?
Usually your solicitor or conveyancer, who needs an exact figure calculated to the completion date. You can ask your lender for an idea of the amount earlier on, which helps you check that an offer will cover what you owe.
Can I sell if I'm in negative equity?
It is possible, but the sale price will not cover the mortgage, so you will need to find a way to pay the shortfall unless your lender agrees something with you. MoneyHelper advises talking to your lender first and, if the shortfall could leave you in debt, getting free debt advice straight away.
Will I pay an early repayment charge if I port my mortgage?
Porting can sometimes avoid a charge, but it is not automatic. MoneyHelper explains that moving is treated as a new mortgage application, so you must pass the lender's checks, and that porting usually needs to happen at the same time as the sale to avoid charges. Ask your lender how it works for your deal.
Related guides
- Facing repossession: your options, including a quick sale Free advice, the lender's duties, and when selling can help.
- Selling your home because of debt or money worries Free debt advice, Breathing Space, secured debts and not rushing.
- How much do cash house buyers pay? Why offers are below market value, and how to judge one.
- Sale and rent back: how it works and the risks What sale and rent back involves, the FCA rules and the risks.