Can You Sell A House That You Owe A Mortgage On?

Written by Mathew McCorry

If you read my property blog now, that’ll be the end of it. I will not look for you, I will not pursue you. But if you don’t, I will look for you, I will find you and I will make you read it.

Yes, you definitely can move, but the price that you sell your property for needs to be higher than the amount left to pay off your mortgage. In this article we will cover:

  • What you need to know about selling with a mortgage
  • What porting is and whether you can do it
  • Other frequently asked questions around selling with a mortgage

What happens to your mortgage when moving?

If you’re looking to sell your home and aren’t looking to buy another, with a mortgage, then selling your home with a mortgage you owe money on is straight forward. You sell the property for the fee which is then used to pay off the mortgage, and any excess will go to yourself.

It’s also fairly simple if you are at the end of the mortgage term, or aren’t fixed in to any particular term, you simply sell and pay off the mortgage. You can then apply for a mortgage on your next property with whomever you please.

The more complex situation is when you are fixed in to a term and want to move property, or you want to move and keep the same mortgage provider, this is what is referred to as “porting”. Put simply you have two options:

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    What is porting a mortgage and how does it work?

    The term porting means that you are looking to keep your current mortgage provider when moving to a new property. The process is pretty similar as to if you where changing to a new lender, your current lender assesses your circumstances, looking at how much you are wanting to borrow and assessing what products may be suitable. Your affordability will be reassessed and the new property you are purchasing will be valued by your lender.

    There are two kind of ways that lenders go about this, they either pay off your current product with the sale and start a new one or if you are wanting to borrow more then they may suggest having an additional product run side by side your current one. You should be allocated a mortgage advisor to help you decide what is best for you financially.

    Should you port your mortgage?

    We’ve explained that you often can port your mortgage and how exactly it works, but is it a good idea? It really depends if it makes financial sense is the answer.

    A negative of porting your mortgage is that you’re limited to only what your current mortgage company have in terms of offers, and there’s a big likelihood you may miss out on better deals from other companies.

    You need to take into account though that there could be early repayment charges you have to consider if you want to switch mortgage providers, and this may mean that the great new mortgage deal you’ve found doesn’t actually work out cheaper.

    Porting your mortgage will usually be easier than applying for a completely new mortgage, as your current mortgage company should have most the details and information that they need to grant you a new mortgage.

    Before doing anything, you should always speak to an independent mortgage broker to work out what the best overall deal for you is.

    Will I be allowed to port my mortgage?

    Mortgage companies of course want to try and keep your business, and will do what they can in order to ensure you don’t go elsewhere. There may however be a few reasons that you are unable to port your mortgage to a new property:

    • You might not meet the criteria required. If your circumstances have changed since first getting your mortgage, such as a change of job or any debts you may have acquired.
    • If the new property you are looking to purchase doesn’t meet your current lenders criteria, such as it being non-standard construction.
    • You might be deemed as high risk and they may no longer want you as a customer if for instance you have previously made late payments.

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    My lender won’t let me port, what can I do?

    If your lender won’t let you port then you essentially have two options if you are determined that you still want to sell, which are:

      What’s the cost of porting a mortgage?

      If you keep the same level of borrowing you shouldn’t expect to pay anything for porting your mortgage, so technically speaking “porting” itself doesn’t cost.

      It however really depends on the situation and the product you are looking to port too. The mortgage advisor should be able to help you on this in finding the overall best deal, but if you need additional borrowing some products may have a cost for initially signing up.

      Are there alternatives to porting a mortgage?

      Unfortunately, you only have a few options when it comes to an alternative to porting, and there not always feasible.

        Is there anything to be aware of when porting a mortgage?

        There are only a few things to be aware of when porting a mortgage this includes:

        • If there’s a delay between your sale and purchase you need to let your lender know, this will usually result in you having to pay the early repayment charge which will be refunded when you complete on your purchase.
        • As previously mentioned, if your circumstances have changed then you could fail the affordability checks, and the lender may not lend further money to you, although this shouldn’t impact your current mortgage.

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        Frequently Asked Questions

        Can I sell my home before I’ve paid off the mortgage?

        Yes, you certainly can, it’s mostly straight forward and you’ll just pay off the mortgage with the sale of your home but if you’re in a fixed mortgage term you may want to consider porting.

        Does porting my mortgage make financial sense?

        It depends on your circumstances and whether your lender is offering good mortgage packages, you should also talk to an independent mortgage broker to work out the best deal for you.

        Can I move to a bigger house and borrow more?

        Usually yes, mortgage providers will be more than happy to expand your loan as long as you can afford it. This can come in the form of topping up your current mortgage or having an additional product run alongside it.

        Can I sell with a mortgage and move to a cheaper house?

        If you need to reduce your borrowing from your mortgage provider then you can often do this but you will need to pay the early repayment charge, but only on the amount of the reduction.

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