Can You Sell a House with a Mortgage?

Sell a House with a Mortgage

If you’re considering moving home and want to sell your current one, there are likely to be a number of different things on your mind – one of which may be if you will actually be able to do so if you’re still paying off your mortgage.

Fortunately for most of those in this position, it shouldn’t be too much of a hassle. Of course, there are often things that you’ll need to consider if you are planning on selling in this situation, but the good news is that it’s certainly possible and perhaps not as complicated as you may think.

Is selling a home with a mortgage a good idea?

There are some instances where this may not be the best financial move for you – for example, if you’re in negative equity, you may want to consider your options carefully. If house prices have fallen and the value of your property is less than what it was when you bought it, selling won’t always be the best idea.

On the plus side, this is a rare occurrence. While it can be an issue during a recession or in specific types of areas (for example, where the market for the type of property you’re selling is in little demand), there’s still a good chance that you won’t have to worry about it.

When this is the case, however, it might be worth thinking about alternative options and how’s best to progress – after all, something as simple as making the decision to wait a while could prove to be much more lucrative.

It’s also worth noting that if you’re looking to redeem part (or all) of your mortgage, there may be some additional financial penalties (particularly if you’re still within the period where an early repayment charge applies). To find out more about your situation, take a look at the terms and conditions of your mortgage and perhaps consult a financial advisor.

And if you’re in good equity?

If you’re not in bad equity and want to sell your home, the chances are that you won’t have to worry about any serious issues arising during the process. In fact, you’ll probably be surprised at how easy it can be! Generally, as long as you can afford it, there’s no issue with selling your home at any time; even if your current mortgage term isn’t over yet.

Porting a mortgage vs applying for a new one

If you’re moving and are going to need a mortgage for your new purchase, you’ll have two options available to you: take your current home loan with you (known as porting), or apply for a new one.

In most cases, the decision of which one to choose will need to be based on your own unique situation. It can be crucial to consider all the different costs involved with your current deal and how it compares to the costs of a potential new product.

Unless you’re porting your mortgage, your home loan will be paid off when you sell (you’ll need a redemption statement from your lender, and to repay the outstanding loan amount out of your buyer’s completion funds). For the new property mortgage, whether you’re porting or applying for a new product, you’ll need to make an application for that separately.

Porting can often be an excellent choice for buyers. Most home loans are portable, fortunately, and for those who have satisfied their lender’s criteria, getting a favorable product and interest rate like your current one can be fairly simple, often allowing you to save a considerable amount of cash.

Even though most lenders will want to retain your business, transferring your current mortgage to a new house isn’t always an option. This may be because the new property might not meet their lending criteria, or perhaps the lender may not want you as a customer anymore (which is far more common among individuals who make late payments or if your mortgage will run into your retirement).

If you feel that the final decision is unfair, you could challenge it and see if that goes anywhere. Perhaps you will be able to come to a more satisfactory agreement.

Need more information?

Share with us how we can help, or call us at: (407) 315-1636

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