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Selling a House While in a Fixed Rate Mortgage

We explore what happens when you move house if you have a fixed rate mortgage

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: May 13, 2022

Fixed rate mortgages can provide a level of predictability for homeowners who benefit from a guaranteed rate for a set period of time, but what happens when you need to sell a property that has one secured against it? This is a problem many homeowners face.

Some are concerned about the financial consequences of breaking their contract early, while others want to keep their mortgage and simply transfer the interest rate and terms across to their new property when they move, subject, of course to the lender’s approval.

We’ve put together this guide for anyone who’s hoping to sell a property while in a fixed rate mortgage.

In it, you’ll learn whether this is possible, the implications of leaving one of these deals early, whether you can port your fixed rate mortgage to another property and more.

Can you sell a house if you have a fixed-rate mortgage?

Yes. There’s no reason you can’t sell a property while in a fixed rate mortgage but keep in mind that it could end up costing you more to move if you’re still in your introductory rates period. The main difference between selling a property with a fixed rate mortgage secured against it is that you would usually be hit with an early repayment charge (ERC). This is typically a percentage of the outstanding loan balance and it’s payable to your mortgage lender if you were to pay off your mortgage balance through a sale or remortgage while in the fixed rate period of your current deal.

To avoid this additional fee, some homeowners choose to wait until their fixed interest rate period ends, delaying their move until they’ve been transferred onto their lender’s standard variable rate (SVR). There are also a minority of fixed rate mortgage products that do not include an ERC.

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How much extra fees will you need to pay?

Most people moving house while in the initial rates period of a fixed rate mortgage are charged between 1% and 5% of the outstanding loan balance in early repayment charges. This is the typical cost of an ERC, but be sure to contact your mortgage lender to request an accurate figure before pressing ahead. You should also ask them about any other fees that may apply.

Introductory rates periods on fixed rate mortgages usually run between two and five years. The longer you have to go in your fixed period, the more expensive it’s likely to be to sever the agreement early.

Once you know exactly what it will cost you to sell your house during your initial rates period (with the ERC factored in), you can make an informed decision on whether to delay your plans until you’ve moved onto your lender’s standard variable rate or press ahead with the sale regardless of potential ERCs.

If you need impartial advice on the most cost-effective course of action, a mortgage broker can bring you up to speed on all of the implications of leaving a fixed rate mortgage early, advise you on whether to port your mortgage if you’re buying another home and guide you through the process.

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Can you move a fixed rate mortgage to another property?

Yes, this is known as ‘porting’ a mortgage and it’s theoretically possible since many fixed rate mortgage products are portable. If you’re moving house and want to take your existing agreement with you, it’s common practise for your lender to carry out their mortgage affordability checks again. Although your rates and terms will be the same, you’re essentially applying for the loan from scratch.

Your lender may ask questions about your debt to income ratio, credit history, number of dependents and your age, as they will be keen to find out whether your eligibility has changed. The state of the new property that you wish to move to with your fixed-rate mortgage will also be considered as some property types such as high rise or listed buildings can be more difficult to mortgage.

Porting to a more expensive property

This is possible, but things can become less straightforward and more costly here. If you want to port your fixed rate mortgage to a more expensive property, you might need to borrow more, assuming you don’t have enough capital of your own to make up the cost difference between the two properties.

Some lenders might charge you an extra fee for increasing your loan and this will likely be on top of a valuation fee so they can check whether your new property is worth what you’re planning to pay for it.

Porting to a cheaper property

This is also possible, and it can be an attractive option since you’d end up with a smaller debt, avoid extra fees for borrowing more and wouldn’t have to pay an ERC to move house while in a fixed rate mortgage. Your lender is, however, likely to reassess your eligibility and a valuation will be needed on the new property.

Are there any alternatives?

You could always buy your next home with a new mortgage from another lender, but this will mean being hit with early repayment charges if you’re still in the introductory rates period of your fixed rate mortgage. That said, if there’s a deal with a much more favourable interest rate available with another lender, consider the overall cost of switching to that mortgage with the ERC factored in. It might be the case that, in the long run, you’d pay less overall thanks to the lower interest rate.

Some people, such as those whose fixed rate mortgage are not portable, have no choice but to choose this option if they’re buying another house and can’t afford to purchase outright. When delaying the move until the standard variable rate kicks in isn’t viable, some people find that taking a hit on the early repayment charges is their only option, but it’s worth talking to a mortgage broker if you find yourself in this boat. They will be able to offer you bespoke advice and help you make the most cost effective decision about your fixed rate mortgage and your home move.

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Speak to an expert about selling a house while in a fixed term mortgage

Whether you’re selling a house while locked into a fixed rate mortgage or hoping to port your fixed rate mortgage to a new property, speaking to the right mortgage broker is the best place to start. An expert advisor who specialises in fixed rate mortgages can lay out all of the available options, offer you bespoke advice and help you save money if you need to port or take out a new mortgage.

We offer a free broker-matching service that will take your needs and circumstances into account and pair you up with the right fixed rate mortgage specialist for the job. Speaking to them before you proceed with your house sale or move could save you time and money.

Call Online Mortgage Advisor today on 0808 189 2301 or make an online enquiry. Your initial consultation with a vetted mortgage broker from our network will be free with no obligation to take things any further, and it won’t leave any marks on your credit report.

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Want to know how to get out of your fixed rate mortgage? Understand your early repayment charges? Or just have a specific question about your fixed rate mortgage.

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About the author

Pete, 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 found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with 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 OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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