Selling your home may seem like a simple process – unfortunately that isn’t always the case. If you’re selling up to buy another property, be it a larger home, to downsize or to move region, country or even continent there are many details to take into consideration, one of which is your mortgage.
We’ve put-together this brief but detailed guide on the important details to arrange and what options are open to you.
What happens to your mortgage when you sell your home?
If you’re selling your home and not buying somewhere new, then the process should, be relatively simple. Once the property is sold, survey done, contacts signed and monies transferred, your solicitor or conveyancer will arrange for the outstanding balance of your mortgage to paid, along with all your additional costs and charges, before depositing the final, remaining balance into your account.
Among the charges could be early redemption fees. These are a type of ‘exit fee’ charged by a lender if you repay your mortgage before the end of an agreed fixed-term arrangement. If you only have a few months left of your fixed-rate and/or term deal, then those charges should be relatively small. If, however, you’re selling with a couple of years left on the mortgage term, then those fees could be pretty large and you’ll need to be aware of them when you’re making your calculations.
For those of you selling your home in order to purchase a new one, there are a few more details you’ll need to bear in mind and act upon.
First of all, regardless of what happens, if you need a mortgage for your next home, unfortunately, you can’t simply keep your existing mortgage with the same repayments and contracts. That’s right, you will need to re-apply for a mortgage, even if it’s with the same lender and your mortgage is a portable one.
The reason for this is so the lender can ensure they’re providing you with the right mortgage type and amount for your circumstances, needs and affordability score. This is true whether you need a bigger mortgage, smaller loan or one of a similar amount.
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