If you are selling your house, you might not be purchasing a property at the same time, for example if a related purchase falls through or if you have not yet found the right property. We look at the sale process and answer the question, What happens to your mortgage when you sell your house and don’t buy another?

We also look at how the purchase process works when you find somewhere to buy and need a mortgage to finance it or want to move your existing mortgage to your new home.

At Lockings Solicitors, we have a highly experienced team of conveyancing solicitors who have been representing clients in the East Yorkshire area and beyond for many years. We provide a bespoke service, ensuring that you are kept up to date throughout the transaction and that any information is provided promptly.

We always aim to reach exchange of contracts without delays and we have the legal expertise to deal with complications effectively. We have an outstanding reputation in the local community and our clients often recommend us to their families and friends.

We offer a FREE initial chat so that you can ask us any questions you may have about mortgages and the conveyancing process. Call us on 01482 300 200, email us at welcome@lockings.co.uk or fill in our Free Online Enquiry and we will call you back promptly. We have offices in Beverley, Hull and York and represent clients across the East Yorkshire and York area.

Selling your house

If you ask us to represent you in a house sale, we will provide you with some initial forms to fill in. We have a secure online portal that you can use to let us have information at your convenience.

Once you have a buyer in place, we will obtain your title deeds and ask your mortgage lender for a redemption statement showing the amount they will need to discharge your mortgage. Even if you are buying another property, your existing mortgage will have to be paid off when your sale is completed.

The mortgage redemption statement will include any extra costs there may be, such as the lender’s administration fee and penalties if you are paying off the mortgage during a fixed rate, tracker or otherwise discounted period.

If you are on your lender’s standard variable rate, you will not generally be charged a penalty, but they will have certain fees that they will include on their statement.

What happens to your mortgage when you sell your house and don’t buy another?

When your buyer is ready to exchange contracts, we will discuss potential completion dates with you and liaise with the buyer’s solicitor to settle on a date. On exchange of contracts, the completion date becomes legally binding.

We will then ask your mortgage lender for an accurate redemption statement calculated to the date of completion. We will provide you with a copy of this together with a full statement prepared by us showing the amount that will be paid to you on completion.

If the amount outstanding on your mortgage is more than the sale price, known as negative equity, you would need to let us have cleared funds in readiness for the completion day so that the mortgage can be paid off in full.

On the day of completion, as soon as we receive the sale money from your buyer’s solicitor, we will redeem your mortgage and account to you for the balance as appropriate.

Your lender will confirm that their charge has been paid, and it will be removed from the legal title of the property at the Land Registry.

If you are intending to buy another property, you can put the money aside somewhere where it will be available when needed.

A mortgage must always be cleared in full on the day that the sale of the property is completed.

What happens to your mortgage when you sell your house and buy another?

If you are tying in the purchase of another property, we will still need to redeem your existing mortgage on the completion day. You will need to take out a new mortgage for the new property, as each mortgage offer is specific to the property it names.

However, if you want to stay with your existing lender, they may be prepared to give you certain advantages.

It might be quicker and easier to apply for a new mortgage, as you are already a borrower with them, and therefore, they have already made most of the enquiries and investigations into your financial situation that they need.

You may be able to ‘port’ your mortgage. This means that although you will be taking out a new mortgage, you can keep your existing terms and conditions, including your existing mortgage rate. You may be able to avoid paying repayment penalties under this option. Not all lenders offer this option.

If your property is in negative equity when you sell, meaning that you owe your lender more than you will be receiving from your buyer, your lender may be prepared to port the outstanding balance to your new property. This means that the previous mortgage would be fully paid off and discharged. The lender would add the outstanding amount to any sum they are lending you for your new home.

Can I port a mortgage if I sell my house and don’t buy another straightaway?

This depends on your lender. Some lenders may be prepared to let you port your mortgage provided that your purchase and new mortgage are completed within a set period of time, usually one, three or six months.

If you go ahead with your sale before your purchase is ready, you need to be aware that there is a risk it might not be completed in time. If your seller were to pull out of the transaction, you would struggle to find a new property to buy and reach readiness for completion within a tight timeframe. This is because there is often a chain involved in conveyancing transactions, and it is necessary to wait until everyone is ready to exchange.

Potential delays include if problems are revealed on a survey, there are legal complications that need to be dealt with or delays arise in someone obtaining a mortgage offer.  It can be particularly risky if mortgage lenders are very busy, for example, if they have made a good deal available which has proved popular or if the property market is especially active.

If you are in negative equity, you will have to completely pay off your mortgage when your sale completes, whether or not you tie in a purchase.

Contact our East Yorkshire and York area conveyancing solicitors

If you have any questions about what happens to your mortgage when you sell your home or how the sale and purchase process works, we will be happy to answer them.

You can ring us for a FREE initial chat on 01482 300 200, email us at welcome@lockings.co.uk or fill in our Free Online Enquiry and we will call you back promptly. We have offices in Beverley, Hull and York and represent clients across the East Yorkshire and York area.