Selling A House With A Mortgage
Selling A House With A MortgageSelling a house with a mortgage is a common practice in the UK. However, there is more than one way to do this, as well as some considerations to make when choosing to do so. As the nation’s biggest estate agency, filled with property-selling experts, we’re on hand to help you navigate this process and sell your lovely home with peace of mind. In this guide, we’ll answer some of the most frequently asked questions about selling a house with a mortgage, including what happens to your mortgage when you sell your house, how to sell a mortgaged house and other options such as porting.
Selling a house with a mortgage is a frequent method of selling, however, there are a few things that you need to consider before you put your house on the market. First, you need to check with your lender to find out if there are any penalties or fees for paying off your mortgage early. If there are, you will need to factor them into your calculations when deciding on a sale price for your house.
When you sell your house, the income from the sale will be used to pay off your mortgage. If you sell your house for more than the outstanding balance on your mortgage, you will receive the difference as profit. However, if you sell your house for less than the outstanding balance on your mortgage, you will be responsible for paying the difference. One reason your house may become worth less than the remaining balance of your mortgage and therefore sold for less is due to negative equity. Negative equity often happens due to falling house prices, but can also be the result of taking out an interest-only mortgage, where you only ever pay the interest on the amount you borrow rather than repaying the mortgage sum.
In most cases, your solicitor will work with your lender to obtain a redemption statement, which will provide the amount that you owe on your mortgage. This amount will be paid to your lender with the revenue from the sale. Your solicitor will then distribute any remaining funds to you. This means that you will no longer be responsible for making mortgage payments on that property; however, if you have any outstanding fees or penalties associated with your mortgage, such as paying it off early, you will still be responsible for paying them.
If you’re planning to buy another property, you may need to take out a new mortgage to finance the purchase. Alternatively, you may be able to transfer your existing mortgage to the new property through a process called porting. We’ll cover porting in more detail later in this guide.
Selling a mortgaged house is similar to selling any other property, but there are a few extra steps that you need to take. Here’s a step-by-step guide to how to sell a house with a mortgage:
It is important to shop around for the best mortgage deal when you are buying a new property. Consider factors such as interest rates, repayment terms, and fees when comparing mortgage offers from different lenders. You may also want to consult with a mortgage broker who can help you find the best mortgage deal for your specific situation.
Porting a mortgage is the process of transferring your existing mortgage from one property to another. This can be a good option if you are selling your current property and buying a new one at the same time. When you port your mortgage, your existing mortgage terms, including your interest rate and repayment schedule, will remain the same. You may also be able to avoid penalties or fees for paying off your mortgage early.
There are further advantages to porting your mortgage in addition to avoiding early repayment fees:
Book a free house valuation or sell your home for free with Purplebricks. We can even help with tips on how to sell your house. At Purplebricks, we don't take a percentage of your selling price, or charge a flat fee. Our estate agent fees are 0. No hidden costs or fees, it's a free estate agent service.