Selling a House While in a Fixed Rate Mortgage

Everything you need to know about selling your house with a fixed rate mortgage and how a broker can help you

Firstly, how long is left on your current fixed rate deal?

Home Fixed Rate Mortgage Selling A House While In A Fixed Rate Mortgage

Author: Pete Mugleston

Mortgage Advisor, MD

Updated: March 15, 2024

A fixed-rate mortgage can be a great way to provide payment stability, but what happens if you want to sell your house while you’re still tied in?

In this article, we’ll explain what your options are, how you can limit the effects of any fees due, and why speaking to a broker is the best way to ensure you make the most financially sound decision.

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. There are a handful of fixed rate mortgages that 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 that time to save 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.

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What to do if you’re buying another property

In this situation you have two options:

Pay the ERC:

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.

‘Port’ your mortgage:

Porting is the process of 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 and you are not eligible to 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, it’s likely that porting will not 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:

  1. Speak to your lender to find out whether porting is possible and get full details of any fees.
  2. Also ask them for a remortgage quote to see whether that is cheaper.
  3. 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?

It might be that you’re 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 it’s your choice 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 ensuring you carefully manage your overall borrowing costs. But with so many variables, trying to work these out can be confusing and a little overwhelming.

That’s where 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.

What’s more, our broker matching service will pair you up with an advisor who has a track record of helping in your position get the best deal.

Call today on 0808 189 2301 or enquire online to get matched with your ideal broker.

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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 Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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