Are there any fees for selling a house with a mortgage?

Not every cost connected with selling a mortgaged property is a fee, and some expenses only arise in particular circumstances. The main figure to establish is the amount needed to repay the mortgage on completion, then deduct the costs that apply to your sale from the expected sale price. The remaining amount is the equity available to you, although this can be reduced further if the property sells for less than the outstanding balance.

Costs that may apply include:

• Mortgage interest up to completion: interest normally continues to accrue until the lender receives the repayment funds. The final redemption figure can therefore differ from the balance shown on a recent mortgage statement.
• Early repayment or exit costs: a fixed, discounted or tracker deal may include a charge for repaying the borrowing during a specified period. Check the mortgage offer and current terms, particularly if you are considering selling before the deal ends.
• Mortgage broker fees: if you use a broker to arrange replacement borrowing, the broker may charge a fee. This is separate from the cost of repaying the existing mortgage.
• Leasehold information costs: leasehold sellers may have to pay for a management pack, replies to enquiries, a statement of service-charge payments or a notice relating to the transfer. The managing agent or freeholder sets these charges.
• Property compliance and document costs: missing certificates, title documents or permissions for alterations can require additional searches, applications or specialist advice before the sale can proceed.
• Removal, storage and preparation costs: these are not mortgage charges, but they can affect the amount left from the sale. Examples include removals, storage, minor repairs, cleaning and clearance.

If the sale price is lower than the mortgage redemption figure and associated expenses, you may have negative equity. In that situation, the lender will generally need an agreed plan for covering the shortfall before it releases its charge over the property. Do not assume that a buyer’s offer automatically settles every amount owed to the lender.

Tax also needs to be considered according to your circumstances. A main private residence will often be treated differently from a second home, rental property or property used partly for business purposes. The tax position can depend on ownership, periods of occupation and other factors, so obtain regulated tax advice where a potential liability exists.

Before accepting an offer, prepare a simple completion calculation:

1. Start with the agreed sale price.
2. Subtract the lender’s required repayment, including any applicable interest or charge.
3. Subtract professional costs and any leasehold, compliance, removal or preparation expenses that you expect to pay.
4. Allow for possible changes between the estimate and completion, such as additional mortgage interest or revised legal costs.
5. Compare the resulting figure with your financial plans, including any deposit needed for another property.

Ask each professional for a written quote and check whether it includes VAT, searches, bank-transfer charges, identity checks, leasehold supplements and work required if the transaction does not complete. If selling to a cash buyer, ask for a clear written statement showing the proposed purchase price and every deduction. A sale can have a different cost profile from an estate-agent transaction, but the contract should make clear which expenses you remain responsible for and whether any buyer-side costs are passed to you.