What happens with my existing mortgage when I sell?

Your mortgage is repaid on completion

The moment your sale completes, your solicitor uses the buyer's funds to repay your outstanding mortgage balance directly to your lender. This is known as "redeeming" your mortgage.

• The solicitor receives a redemption statement from your lender outlining the exact final balance.
• They send the repayment automatically from the sale proceeds.
• Any surplus money (after fees) is transferred to you.
• If the sale price is not enough to cover the mortgage, additional arrangements must be made before completion.

Once redeemed, the lender removes their charge from the property at HM Land Registry.

What if you want to take your mortgage with you?

Many lenders allow you to "port" your mortgage to a new property. This means keeping your existing interest rate and product terms, but applying them to your next home.

What porting typically involves

• Your lender reassesses your affordability (as if you're applying again).
• The new property must meet the lender's criteria.
• If the new home costs more, you may need a top-up loan on a new rate.
• If the new home costs less, you may repay part of the mortgage - which can trigger early repayment charges.

Porting is helpful if you have a particularly good interest rate or you're in a fixed-term period with high penalties.

Early repayment charges (ERCs)

If you're locked into a fixed or discounted rate, you may have to pay an early repayment charge when redeeming your mortgage.

ERCs usually apply when:

• You are still within the fixed-rate or introductory period.
• You're repaying the full mortgage rather than porting it.
• You're reducing the loan balance significantly during porting.

Charges can be a percentage of the outstanding balance, often reducing each year of the fixed term.

What if you're buying your next home before you sell?

If your move isn't simultaneous, you have a few options:

1. Bridging loan

This is short-term finance that covers the gap between buying and selling. It's fast but usually expensive, so should be used cautiously.

2. Let-to-buy mortgage

You keep your current property and rent it out, switching your existing mortgage to a let-to-buy product. You then take a new residential mortgage for your onward purchase.

3. Agreement to sell later in a chain

Most common - your purchase simply waits until your buyer is ready and all parties complete together.

What if your home is worth less than your mortgage?

This is known as negative equity. Options include:

• Staying put until values rise or your mortgage reduces.
• Making a lump-sum payment to clear the shortfall.
• Taking a specialist loan - although lenders rarely approve this.
• Agreeing a repayment plan with your lender (case-by-case).

Negative equity sales are complex and often require lender approval.

Your solicitor's role

Your conveyancer manages all mortgage-related admin during the sale. They will:

• Request a redemption statement from your lender.
• Confirm any fees or ERCs.
• Repay the mortgage at completion.
• Deal with the lender to remove the charge at Land Registry.

If you're porting your mortgage, they also arrange the necessary documentation with your lender.

How Farrell Heyworth helps

At Farrell Heyworth, we help you understand your financial position early in the process so your sale and onward purchase run smoothly. Our team works closely with your conveyancer and mortgage adviser to:

• Identify whether porting is a good option.
• Help you prepare for redemption or fees.
• Support chain coordination to avoid financing gaps.
• Provide trusted mortgage adviser referrals if needed.

Your existing mortgage doesn't cause complications if managed properly - it is simply repaid, replaced or transferred as part of the sale. Knowing your options early helps you plan financially, avoid penalties and secure your next home with confidence.

For expert guidance throughout your sale or onward move, speak to the team at Farrell Heyworth.