The Short Answer
Having a mortgage does not prevent you from selling your property.
If your property is subject to a mortgage, your conveyancer will work with your lender to ensure that the mortgage is repaid from the sale proceeds on completion. Once it has been redeemed, the lender's legal charge over the property will be removed.
This is a routine part of the conveyancing process.
Do I Need to Tell My Conveyancer?
Yes.
When you instruct us, please let us know if your property is subject to a mortgage.
We'll ask for details of your lender and your mortgage account number so that we can obtain the information needed to progress your sale.
What Is a Mortgage Redemption Statement?
A mortgage redemption statement is a document provided by your lender confirming how much is required to repay your mortgage on a specific date.
The statement usually includes:
- The outstanding mortgage balance.
- Any interest due up to the proposed completion date.
- Any administration fees or early repayment charges, where applicable.
As the amount can change over time, we may need to obtain an updated redemption statement if your completion date changes.
How Is My Mortgage Repaid?
On the day of completion, your conveyancer will receive the sale proceeds from the buyer's conveyancer.
From those funds, we will:
- Repay your mortgage lender.
- Pay any other agreed sums from the sale proceeds.
- Deduct our legal fees and any agreed disbursements.
- Transfer the remaining balance to you.
You will receive a completion statement showing how these figures have been calculated before completion takes place.
What If My Sale Doesn't Cover My Mortgage?
If the sale proceeds are not enough to repay your mortgage and all associated costs, you should tell your conveyancer as soon as possible.
Completion cannot take place unless arrangements have been made to repay your lender in full or your lender has agreed an alternative arrangement.
We will explain the position and discuss the options available to you.
Will My Mortgage Be Removed from the Title?
Yes.
Once your lender has received the redemption monies, they will arrange for their legal charge to be discharged.
HM Land Registry will then update the title to show that the mortgage has been removed as part of the registration process.
What If I Am Buying Another Property?
If you are selling and buying at the same time, the money remaining after your mortgage has been repaid can usually be used towards the purchase of your next property.
Your conveyancer will prepare completion statements for both transactions and explain how the funds will be transferred.
Top Tip
If you think your mortgage may include an early repayment charge, check with your lender or mortgage adviser as early as possible.
Understanding these costs in advance can help you plan your finances before your property is sold.
In Practice...
Many sellers assume they need to repay their mortgage before putting their property on the market.
In fact, this is rarely necessary. In most transactions, the mortgage is redeemed automatically by your conveyancer from the sale proceeds on the day of completion, making the process straightforward for you.
Common Misconception
"I have to pay off my mortgage before I can sell my property."
Not usually.
Your existing mortgage is normally repaid from the sale proceeds on completion. Your conveyancer will obtain the necessary redemption statement, arrange repayment of your lender and account to you for the remaining balance.
Did You Know?
Most homeowners sell their property while there is still a mortgage secured against it. Redeeming an existing mortgage from the sale proceeds is a normal part of the conveyancing process and is something your conveyancer deals with on a regular basis.