What should I inform my lender about when preparing to sell my home with a mortgage?
Tell your mortgage lender that you intend to sell, providing the property address, your expected timescale and your solicitor’s details once appointed. Ask for an up-to-date redemption statement, including the outstanding balance, any early repayment charge and the process for repaying the mortgage from the sale proceeds.
When preparing to sell a mortgaged home, inform the lender about the proposed sale, the parties responsible for the mortgage, any circumstances that could affect repayment and any change to the expected completion arrangements. The lender needs accurate information so it can confirm the amount required to discharge its security and release the property from the mortgage.
- Confirm the mortgage account details: provide the account number and check that the lender’s records show the correct borrowers, property address and correspondence details. If your address or contact details have changed, update them before the conveyancing process progresses.
- Tell the lender who is selling: all borrowers should understand and authorise the sale, particularly where the mortgage is held jointly. A separation or divorce does not normally remove either borrower’s responsibility for the mortgage until the loan is repaid or the lender formally agrees to a transfer.
- Explain any arrears or repayment arrangement: if payments have been missed, an arrangement is in place, or possession action has been threatened, notify the lender and your solicitor. The sale may still proceed, but the arrears and associated costs may need to be included in the amount paid from the proceeds.
- Disclose additional borrowing secured on the property: this can include a second charge, secured loan or other legal charge. Each chargeholder may need to provide a settlement figure and consent to the release of its security. Your conveyancer can check the title for registered charges.
- Provide relevant property information: tell the lender if the property is leasehold, has been altered, is partly used for business, is unoccupied or has an unusual legal arrangement. These details may affect the lender’s requirements or the information requested by the conveyancer.
- Keep the lender informed of material changes: notify it if the agreed buyer withdraws, the sale price changes, completion is postponed or the property will remain empty before completion. A lower price can create a shortfall if the proceeds no longer cover the mortgage and other secured debts.
Your solicitor or conveyancer will usually deal with the lender’s legal requirements. They may request a final settlement statement, confirm the intended completion date, obtain the lender’s instructions for redeeming the loan and give an undertaking to pay the required amount from the sale proceeds. After repayment, the lender should arrange for its charge to be removed from the title, allowing ownership to pass without that mortgage remaining registered.
Ask your conveyancer to compare the lender’s settlement figure with the expected net proceeds. The calculation should allow for the sale price, estate agency or legal costs, any applicable mortgage charges, secured debts, arrears and adjustments made on completion. If the estimated proceeds are insufficient, do not wait until exchange of contracts: contact the lender and solicitor to discuss whether a separate contribution, repayment arrangement or approval for a shortfall sale is required.
Do not cancel buildings insurance or stop making contractual mortgage payments merely because the property is under offer. Mortgage terms commonly continue until redemption, and missed payments can affect the account and the sale process. Check the policy and lender’s instructions if the home will be vacant, as unoccupied-property conditions may apply.
A cash purchaser can remove some chain-related uncertainty, but it does not remove the need to settle the mortgage correctly. Whether the buyer pays cash or uses borrowing, the lender must receive the agreed redemption amount before its security can be released. Keep copies of correspondence, settlement figures and completion statements so you can verify that the mortgage has been closed and any remaining balance or credit has been dealt with.
If you intend to transfer your existing mortgage to another property rather than repay it from the sale proceeds, tell your lender before committing to the move. This is known as porting the mortgage, but it is not automatic: the lender may assess the new property, the proposed borrowing and your circumstances before agreeing to the transfer.
Give the lender the expected sale date, the purchase details for the replacement property and the amount you plan to borrow. Ask whether the existing product can be ported in full, whether additional borrowing would be treated separately and what happens if the sale and purchase do not complete together. The lender can then explain whether the mortgage will be redeemed on completion or transferred under its lending requirements.
Keep the lender’s written explanation with your conveyancing documents. A decision to port or repay can affect the settlement figure, the funds needed for the next purchase and the arrangements your solicitor makes for completion.