Selling a House with a Mortgage: Redemption Statements, Early Repayment Charges and Negative Equity

Most people who sell their home in the UK do so before their mortgage is fully paid off. This is entirely normal, well-established in law, and not a barrier to selling. What it does mean is that your mortgage plays a direct role in how the sale is structured, what documents your solicitor needs to arrange, what it may cost you to exit your deal early, and how much of the sale price you actually keep.

Understanding how your mortgage fits into the selling process puts you in control of the financial picture from the start. You can plan accurately, avoid expensive surprises, and make informed decisions about timing, pricing, and your onward move.

Use the free Cost Saving Calculator on YooSell to see your complete financial picture before you list, including how much you save by selling without a traditional agent's commission.

This guide covers everything sellers with a mortgage need to know. It explains what a redemption statement is and how it works, how early repayment charges are calculated and when they apply, what negative equity means and what your options are if you are in that position, how porting works if you are buying a new home at the same time, and what happens to your mortgage on completion day.

Can You Sell a House with an Outstanding Mortgage?

Yes. Selling a property before the mortgage is fully paid off is standard practice in the UK. According to data published in early 2025, approximately 10.94 million active mortgages are held in the UK, with an average outstanding balance of around £193,867 per household. The vast majority of sellers who complete a property sale every year still have a mortgage on their property at the time of sale.

Your mortgage does not prevent you from selling. What it does is create a legal charge over your property that must be settled before ownership can transfer to the buyer. Your solicitor manages this automatically as part of the conveyancing process. The buyer's purchase funds are used to clear the mortgage on completion day, and the remaining proceeds are transferred to you.

When Selling with a Mortgage Becomes More Complex

For most sellers, the mortgage element of their sale is straightforward. The balance is lower than the sale price, the redemption is handled by the solicitor, and the proceeds after repayment are paid to the seller. However, there are three situations that introduce meaningful complexity:

• You are in a fixed rate or tracker period and early repayment charges apply

• Your property is worth less than the outstanding mortgage balance, which is called negative equity

• You are buying a new property at the same time and need to decide whether to port your mortgage or take a new deal

Each of these is covered in detail in this guide.

Understanding the Role of Your Mortgage in a House Sale

Before exploring the specific scenarios, it helps to understand precisely how a mortgage interacts with the sale process at each stage.

What a Mortgage Charge on Your Property Means

When you took out your mortgage, your lender registered a legal charge against the title of your property at HM Land Registry. This charge gives the lender a legal interest in the property as security for the loan. It means that if you were to sell without repaying the mortgage, the lender's charge would remain on the title and the buyer would not receive clean, unencumbered ownership.

This is why your mortgage must be redeemed at or before completion. The charge cannot simply be left in place when ownership transfers. Your solicitor handles the process of repaying the lender and ensuring the charge is removed from the title register on or shortly after completion day.

What Happens to Your Mortgage at Completion

On completion day, the sequence of events is:

• The buyer's solicitor transfers the full purchase price to your solicitor

• Your solicitor pays your mortgage lender the agreed redemption amount

• Your lender confirms receipt and closes the mortgage account

• Your solicitor transfers the remaining sale proceeds to you

• Your solicitor arranges for the charge to be removed from the Land Registry title register

• The buyer's solicitor registers the buyer as the new owner

This all happens on the same day, managed entirely by your solicitor. You do not need to contact your lender directly to arrange the repayment. Your solicitor handles all communication with the lender as part of the standard conveyancing process.

How Your Equity Is Calculated

Your equity is the amount left over after your mortgage and all selling costs have been deducted from the sale price. The basic calculation is:

Sale price, minus outstanding mortgage balance, minus early repayment charges if applicable, minus conveyancing fees, minus any platform or agent fees, equals your net proceeds.

Understanding this calculation in advance, before you list, gives you a clear and honest picture of what you will actually receive from the sale.

Mortgage Redemption Statements Explained

A mortgage redemption statement is the key financial document in any property sale where a mortgage is outstanding. Understanding what it is, what it contains, and when to request it prevents delays and confusion during the conveyancing process.

What a Redemption Statement Is

A mortgage redemption statement is a formal document issued by your mortgage lender that sets out the exact amount required to repay your mortgage in full on a specified date. It is sometimes called a settlement figure or a redemption figure.

The statement is not just your current outstanding balance. It includes:

• The outstanding principal balance on the date the statement is calculated

• Any daily interest accruing between the statement date and the specified redemption date

• Any early repayment charge if you are within a fixed or tracker rate period

• Any administration or exit fee charged by the lender for closing the mortgage account

The redemption statement is calculated to a specific date because interest accrues on the mortgage balance every day. If completion happens later than the date on the statement, a revised figure is needed. If completion happens earlier, the actual amount required will be slightly less.

When Your Solicitor Requests the Redemption Statement

Your solicitor will request the redemption statement from your mortgage lender as the transaction approaches exchange of contracts and a completion date becomes more certain. Most solicitors request it around two to three weeks before the anticipated completion date.

Redemption statements are generally valid for around four weeks from the date they are issued. If the transaction is delayed and the statement expires, your solicitor will need to request an updated version. This is a routine procedure and does not cause significant delay, but it is worth being aware of.

How to Request a Redemption Statement Yourself

You can request a redemption statement from your lender at any point during the sale process. This is useful if you want to understand your financial position before accepting an offer or if you want to check what the early repayment charge would be if you redeemed now.

Contact your lender directly by phone or through your online mortgage account. Specify the date you want the statement calculated to, ideally matching your anticipated completion date. Some lenders charge a small fee for issuing a redemption statement, though many provide the first one free of charge.

What to Do if the Redemption Amount Seems Incorrect

If the redemption statement does not match what you expected, check it against your most recent mortgage statement before raising it with your lender. Common reasons for a higher than expected figure include an early repayment charge you were not aware of, an administration fee added by the lender, and daily interest accumulated since your last statement.

If after checking you believe there is an error, contact your lender directly to query the figure. Your solicitor can also raise the query on your behalf during conveyancing.

Early Repayment Charges: What They Are and When They Apply

Early repayment charges are one of the most common financial surprises sellers with a mortgage face. Understanding when they apply, how they are calculated, and what your options are can save you a significant sum.

What an Early Repayment Charge Is

An early repayment charge, often abbreviated to ERC, is a fee charged by your mortgage lender if you repay all or part of your mortgage before the end of an agreed incentive period. The incentive period is typically the fixed rate, tracker rate, or discounted rate period set out in your mortgage offer.

The charge exists because lenders price their mortgage products on the assumption that you will maintain the loan for the full incentive period. If you repay early, the lender loses the expected interest income and the ERC compensates for that.

When Early Repayment Charges Apply

Early repayment charges typically apply in the following circumstances:

Fixed Rate Mortgages

Most fixed rate mortgages carry an ERC during the fixed period. If you sell and redeem your mortgage while the fixed rate is still active, you will usually face an ERC. Common fixed periods in the UK are two, three, five, and ten years. The ERC is typically highest in the early years of the fixed period and reduces as you approach the end.

Tracker Rate Mortgages

Some tracker rate mortgages carry an ERC, though many do not. Check your mortgage terms carefully. A tracker mortgage that follows the Bank of England base rate may allow you to redeem at any time without penalty once you are beyond a specified initial period.

Discounted Rate Mortgages

Discounted rate mortgages, where your rate is set at a specified percentage below the lender's standard variable rate for an initial period, often carry an ERC similar to a fixed rate product.

Standard Variable Rate Mortgages

If your mortgage has reverted to the lender's standard variable rate, which happens automatically when a fixed or tracker period ends, there is typically no early repayment charge. You can redeem the mortgage at any time without penalty, though some lenders charge a small exit or deeds release fee.

How Early Repayment Charges Are Calculated

ERCs are usually expressed as a percentage of the outstanding mortgage balance. Common structures include:

• A fixed percentage for the entire incentive period, such as three percent of the outstanding balance

• A tiered structure that reduces over time, such as five percent in year one, four percent in year two, three percent in year three, and so on

• A flat fee for early exit rather than a percentage-based charge, which is less common but used by some lenders

The exact calculation method and the applicable percentage are set out in your original mortgage offer document. Your lender can also confirm the current ERC if you contact them directly.

A Worked Example

If your outstanding mortgage balance is one hundred and fifty thousand pounds and your ERC is two percent, the charge would be three thousand pounds. This amount would be shown on your redemption statement and deducted from your sale proceeds by your solicitor on completion day.

How to Find Out If You Have an Early Repayment Charge

Check your original mortgage offer document for the terms of any ERC. If you do not have this, call your lender and ask whether an ERC applies, what the percentage is, and when the incentive period ends. Your online mortgage account may also display this information.

Do this before you list your property, not after you accept an offer. Knowing your ERC position allows you to factor it into your financial planning and pricing decisions from the start.

Options for Minimising or Avoiding an Early Repayment Charge

In some situations, there are practical steps you can take to reduce or avoid an ERC.

Wait Until the Incentive Period Ends

If your fixed or tracker period ends within the next few months, waiting to list until after it ends removes the ERC entirely. The saving may outweigh the cost of a short delay, particularly if the ERC is calculated on a large outstanding balance.

Port Your Mortgage to a New Property

If you are buying a new property at the same time as selling, porting your mortgage transfers your existing rate and terms to the new property, which typically avoids triggering the ERC. Porting is covered in detail in the section below.

Check Whether Overpayments Reduce the Chargeable Balance

Some mortgage products allow overpayments of up to ten percent of the outstanding balance per year without triggering an ERC. If you are able to make permitted overpayments before redemption, the ERC percentage applies to a smaller balance.

Porting Your Mortgage When Selling and Buying at the Same Time

Porting is the process of transferring your existing mortgage from the property you are selling to the property you are buying. It is a commonly misunderstood option that can save sellers from paying an ERC while retaining favourable interest rate terms.

How Porting Works

When you port a mortgage, your lender agrees to transfer the existing loan and rate to your new property instead of you redeeming it. The legal charge on your current property is discharged, your solicitor manages the sale in the usual way, and a new legal charge is registered against the new property.

Porting does not mean the process is automatic. Your lender will carry out a fresh affordability assessment for the new mortgage, which is assessed against your current income, outgoings, and the value of the new property. Your lender will also instruct a valuation on the new property to confirm it meets their lending criteria.

When Porting Is and Is Not Available

Most mainstream residential mortgage products include a porting facility, but it is not universal. Check your mortgage offer document for porting terms. Even where porting is available in principle, your lender can decline the port if the new property fails their valuation, if your circumstances have changed materially since you took out the original mortgage, or if the loan to value on the new property does not meet their criteria.

What Happens if the New Property Costs More Than Your Current Mortgage Balance

If you are buying a more expensive property, you will need to borrow more than your existing mortgage balance. Most lenders allow you to port the existing loan amount and take an additional loan on top at a new rate. The combined lending must meet the lender's affordability criteria and the existing ERC period on the ported element continues to run on its original schedule.

What Happens if the New Property Costs Less Than Your Current Mortgage Balance

If you are buying a smaller property and do not need to borrow as much, your lender may allow you to port and reduce the loan amount, though some lenders apply an ERC on the portion being redeemed that exceeds what can be transferred. Check your mortgage terms carefully in this scenario. The ERC may apply to the difference between the existing balance and the amount being ported to the new property.

Timing Considerations with Porting

Porting requires your lender to approve the new application and the new property before completion on your sale. In a chain, this adds an element of mortgage-related risk. If your lender declines the port application after you have exchanged contracts on your sale, you would be committed to redeeming the mortgage and may face an ERC. Discuss the porting timeline with your lender and your mortgage adviser early in the process so you understand the approval timeline and the risks.

Negative Equity: What It Is and What Your Options Are

Negative equity is the situation where your outstanding mortgage balance is higher than the current market value of your property. It is less common in a period of generally rising property prices, but it does affect some sellers, particularly those who bought at a high point in the market, purchased with a small deposit, or have seen local values fall.

What Causes Negative Equity

Negative equity typically arises in one or more of the following circumstances:

• You bought when property prices in your area were at a peak and values have since fallen

• You purchased with a very small deposit, meaning the loan to value was high from the start and you have not yet repaid enough to build meaningful equity

• You took out additional borrowing against the property, such as a further advance for home improvements, which increased the total debt

• The property has specific characteristics that have affected its value, such as cladding issues in a leasehold building or structural problems identified after purchase

How to Check Whether You Are in Negative Equity

Get a realistic current market valuation of your property and compare it to the outstanding mortgage balance on your redemption statement. If the mortgage balance is higher than the valuation, you are in negative equity.

Use the free Valuation Calculator on YooSell to get a current estimate of your property's market value as part of this assessment.

A single online valuation estimate gives you a broad indication. For a more accurate picture, consider obtaining a formal valuation from a RICS-qualified surveyor before making any decisions.

Can You Sell a Property in Negative Equity?

You can sell a property in negative equity, but you cannot do so in the standard way without your lender's involvement. The reason is that the sale proceeds will not be sufficient to repay the full mortgage balance, which means your solicitor cannot simply redeem the mortgage from the buyer's funds on completion day.

There are several routes available to sellers in negative equity.

Make Up the Shortfall from Savings

If the negative equity gap is relatively small and you have savings available to cover it, you can proceed with the sale in the normal way. Your solicitor will apply your savings alongside the buyer's funds to redeem the mortgage in full. You will leave the sale with no proceeds but also with no outstanding mortgage debt and the freedom to move on.

Agree a Negative Equity Arrangement with Your Lender

Some lenders will consider a negative equity arrangement, sometimes called a shortfall agreement, where they allow the sale to proceed and agree a repayment plan for the outstanding balance. This is not automatic and each case is assessed individually by the lender. Contact your lender as early as possible if you believe you may be in negative equity and want to explore this option. The lender must give written approval before the sale can proceed.

Port the Mortgage to a New Property

If you are buying a new property and the lender agrees, porting the mortgage avoids the need to sell in negative equity at all. The charge transfers to the new property and you continue making mortgage payments as before. This only works if the new property's value supports the outstanding loan and the lender is willing to proceed.

Wait for Values to Recover

If you are not under financial pressure to sell, waiting until the property's market value rises above the outstanding balance is the simplest solution. This may not always be practical depending on your circumstances, but for sellers who have time and flexibility it removes the negative equity problem entirely.

What Negative Equity Means for Your Credit Record

If your lender agrees to accept less than the full mortgage balance on a sale and write off the remainder, this is known as a mortgage shortfall. A shortfall arrangement will typically be recorded on your credit file and may affect your ability to obtain mortgage lending in the future. The specific impact depends on how the arrangement is structured and recorded by your lender. Take independent financial advice before agreeing to any shortfall arrangement.

Where to Get Help if You Are in Negative Equity

Selling a property in negative equity is complex and the financial implications are significant. Before making any decisions, speak to an independent financial adviser who can assess your full financial position and advise on the options available. The government-backed MoneyHelper service provides free, impartial financial guidance. Citizens Advice can also provide support if mortgage arrears or repossession concerns are involved.

How Your Mortgage Affects Your Financial Planning for the Sale

Before you list your property, calculating your expected net proceeds gives you a realistic picture of what the sale will deliver financially and what you can afford for your onward move.

Calculating Your Expected Net Proceeds

The starting point is the realistic sale price, which should be based on current comparable sold prices rather than an optimistic wish price. From this, deduct:

• The outstanding mortgage balance from your most recent statement

• Any early repayment charge if applicable

• Your conveyancing fees and disbursements

• Your listing platform fee or agent fee

• Any other known costs such as a leasehold management pack fee

The resulting figure is your estimated net proceeds. If the number is lower than you expected or lower than what you need for your onward plans, you have time to adjust your approach before listing rather than discovering the shortfall after accepting an offer.

Using the Mortgage Calculator for Your Onward Purchase

If you are buying a new property at the same time as selling, understanding what you can borrow and what your monthly repayments will be on the new mortgage helps you set a realistic budget for your search.

Use the free Mortgage Calculator on YooSell to estimate your monthly repayments on a new purchase based on your loan amount, interest rate, and mortgage term.

Telling Your Lender You Are Selling

You are not required to notify your mortgage lender before listing your property for sale. However, if you are planning to port your mortgage to a new property, it is worth speaking to your lender at an early stage to understand their porting criteria and whether you are likely to qualify before you commit to a purchase.

If you have concerns about negative equity or the ability to meet the redemption amount from the sale proceeds, speaking to your lender before listing gives you more options and more time to agree a resolution than waiting until you are in the middle of a conveyancing transaction.

What Your Solicitor Does with Your Mortgage During the Sale

Your solicitor manages all the mortgage-related steps in the conveyancing process on your behalf. Understanding what they do and why reduces anxiety and helps you respond promptly when they need information from you.

Identity and Mortgage Account Verification

At the outset of the transaction, your solicitor will ask you to provide your lender's name and your mortgage account number. This allows them to make direct contact with your lender and request the necessary documentation.

Requesting and Reviewing the Redemption Statement

Your solicitor requests the redemption statement from your lender and reviews it before exchange of contracts. They will check that the figure includes any ERC, confirm the daily interest accrual rate, and ensure they have sufficient funds reserved from the buyer's purchase price to cover the full redemption amount on completion day.

If the redemption statement expires before completion, your solicitor will request an updated version at no additional cost to you.

Managing the Charge on Your Title

Your solicitor will confirm the existence of the lender's charge on your title register and ensure that the redemption process includes the formal removal of that charge. On completion day, your solicitor sends the redemption funds to your lender by bank transfer and obtains written confirmation that the account is closed. The charge is then removed from the Land Registry title register, which is recorded as a completed step within your transaction.

Distributing the Sale Proceeds

Once the mortgage has been redeemed and your solicitor has deducted their own fees, the net sale proceeds are transferred to your nominated bank account. Depending on your bank and the time of day the transfer is made, the funds typically arrive the same day as completion, either in the afternoon or by early evening. Some banks process the transfer the following working day.

Selling Your Home with YooSell

If you are ready to sell your home in Leicestershire or the Midlands, YooSell is a self-service home-selling platform that gives you full control of your sale without paying traditional estate agent commission. You keep more of your sale price, which matters even more when a mortgage redemption is being deducted from your proceeds.

Why Sellers with a Mortgage Choose YooSell

The less you pay in selling costs, the more you receive from the sale. YooSell charges a fixed monthly fee from forty-nine pounds fifty with no commission taken at completion. There is no percentage of the sale price paid out. Every pound you save on selling costs is a pound that stays in your pocket after the mortgage is redeemed.

See how the full process works on the How It Works page or explore plan options on the Pricing page.

Verified Buyers for a More Certain Sale

Every buyer on YooSell completes identity and financial verification before they can make an offer. This is particularly valuable for sellers with a mortgage because it reduces the risk of a sale falling through after offer acceptance when a buyer's mortgage is declined or their finances are not as strong as expected. You deal only with buyers who are confirmed as financially ready to proceed.

Integrated Conveyancing Access

Once you accept an offer, you can access trusted conveyancers directly from your YooSell seller dashboard. Your conveyancer will manage the redemption statement, the mortgage redemption on completion day, and all communication with your lender on your behalf.

List on Rightmove Through YooSell

You can list your property directly on Rightmove through YooSell by choosing the Enhanced or Premium plan. Rightmove is the UK's largest property portal, and maximum buyer exposure means more offers and a stronger negotiating position on your final sale price. Visit the YooSell Rightmove page for full details.

Free Tools to Plan Your Sale

• Valuation Calculator: get a realistic estimate of your property's current market value before you set your asking price

• Cost Saving Calculator: see exactly how much you save by selling without traditional agent commission

• Mortgage Calculator: plan your monthly repayments on an onward purchase

• Stamp Duty Calculator: calculate the buyer's SDLT liability at the current April 2025 rates