Selling a House While in a Fixed Rate Mortgage
You can sell your house during a fixed-rate deal. Depending on your terms, there may be repayment penalties, but if you’re moving, you could port your mortgage to avoid them. We’ve helped thousands of customers move or sell while in a fixed-rate, making sure they minimise costs along the way. We guarantee to get your mortgage approved and find you the best deal. If we can’t and someone else does, we’ll give you £100!*
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Author: Pete Mugleston
CeMAP Mortgage Advisor, MD
Quick Summary
You can sell your home during a fixed-rate mortgage period, but you may face early repayment charges (ERCs), which can be costly depending on how early you are into the deal. One common alternative is porting the mortgage. This allows you to transfer your existing deal to a new property, avoiding or reducing ERCs.
Not all mortgages are portable, but many fixed-rate products include this option. Another choice is waiting until the fixed term ends to avoid charges altogether. A broker can help you compare the costs and benefits of porting, switching, or repaying early to find the best route forward.
Can you sell a house with a fixed-rate mortgage?
Yes. In most cases, you shouldn’t face too many problems. But if your fixed rate deal is still in place, it’s likely there will be an early repayment charge (ERC). These vary from lender to lender but will usually be between 1% and 5% of your outstanding mortgage balance.
Usually, the longer you have left to run on a fixed deal, the higher the ERC. A handful of fixed-rate mortgages don’t charge an ERC, but these tend to charge higher rates and may not be the cheapest way to borrow unless you know from the outset that you only need a short-term loan.
If your fixed rate deal is due to end soon, you may be able to delay the sale until then to avoid paying the fee. Likewise, if your ERC is calculated on a sliding scale (e.g., 5% in year one, down to 1% in year five), it can be worth waiting until it drops down a level.
Here are some of the key questions you should consider before you proceed:
- What is the remaining term on your current fixed rate?
- Have you checked if your mortgage is portable?
- Do you know what your early repayment charges will be?
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In this situation, you have two options:
There may be times when paying the fee is the best decision, either because you can take out a new mortgage at a more favourable rate or to avoid missing out on your dream home.
Porting is transferring your existing mortgage to the property you are buying.
Porting can cause complications if:
- Your circumstances have changed, and you no longer pass the affordability assessment.
- The provider has updated their lending criteria; you cannot borrow from them.
- The lender doesn’t want to keep you as a customer, possibly due to missed payments.
- The new property doesn’t fit the lenders’ criteria (e.g. it is a non-standard construction or has a thatched roof).
In these circumstances, porting is unlikely to be an option, and you will need to find an alternative provider. This will mean paying the ERC. If this is the case, getting the right deal is crucial, as it can help you claw back all or part of the fee.
For full details, check out our guide to porting a mortgage.
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Porting or paying an early repayment charge: which is best?
This all depends on your circumstances, and each scenario is different. But the way to approach it is always the same.
Follow these steps to get the facts and decide which is right for you:
- Speak to your lender to find out whether porting is possible and get full details of any fees.
- Also ask them for a remortgage quote to see whether that is cheaper.
- Talk to a whole-of-market broker and find out what alternative deals are out there. It may be worth accepting the ERC to get a lower rate.
With this information, you can weigh up the advantages and disadvantages of each route and decide which is right for you.
What if you don’t need another mortgage?
You might be moving in with a new partner, renting, or downsizing and buying a place outright.
In any event, if you don’t need a new mortgage, porting is not an option. In this case, you will need to pay the ERC or cancel the sale.
If you choose to move (and if you can), postponing your house move until it’s more financially viable might be your best bet.
Get matched with a broker experienced in fixed-rate mortgages
When selling a home with a fixed-rate mortgage, crunching the numbers is crucial to carefully managing your overall borrowing costs. But so many variables can be confusing and a little overwhelming.
A mortgage broker with access to the entire UK mortgage market is essential. They will calculate the total cost of porting or remortgaging with your current lender and then compare both options with all available deals you are eligible for with mainstream and specialist lenders.
Call today on 0330 818 7026 or enquire online to get matched with your ideal broker.
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Pete Mugleston
CeMAP Mortgage Advisor, MD
Pete, a CeMAP-qualified mortgage advisor and an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete successfully went the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained and his love of helping people reach their goals led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!
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