Do I Pay My Mortgage the Month I Sell My House?

Things can seem complicated when you’re still paying your mortgage while preparing to sell your home.

Specifically, sellers are concerned about whether or not they should pay their mortgage the month they sell their house. This is, of course, a vital matter to consider when budgeting throughout the sale process.

In this article, the team at Property Solvers – specialists in fast home sales – discuss the question of paying the mortgage once you’ve found a buyer for your property. We’ll explain how things are likely to work in a range of different circumstances, to help you decide on your next steps.

When Do You Stop Paying the Mortgage on a Property For Sale?

You will stop paying the mortgage on the day that contracts are exchanged.

From this point onwards, those payments become the responsibility of the buyer – now the new owner – and you will no longer have debt on that property.

So, do you need to pay the mortgage during the month in which you sell? This depends on the date of the exchange of contracts. If the mortgage is due before that date, you’ll need to pay it. If it is due after, the new owner will need to pay their own lender (unless they are buying the property with cash)

To this end, if you are purchasing a new home with a mortgage, you will be liable for those financial obligations once contracts have been exchanged for that transaction.

Note that you will not have to pay the full mortgage payment amount if you exchange contracts after the day it’s normally due.  For instance, say you pay on the 1st of every month but do not exchange until the 14th.  The (now previous) lender will require payment for only the 14 days, not the full month.

Remember also that you will be liable for estate agency, solicitor and early redemption costs (should you be exiting your mortgage before the term ends).

So, When You Sell Your House, Do You Still Pay the Mortgage?

The answer to this question depends on a number of elements. The first is: have the proceeds from your property sale been used to pay off the remainder of the mortgage owed? If so, there will be nothing left to pay.

Should this not be the case, you may be able to “port” your mortgage. In a basic sense, this means to terminate the mortgage on the property you are are selling. Then your lender may re-open it against any new property you are purchasing.

But what if you are in negative equity? If this is the case, you should contact your mortgage lender. They will inform you of their approach regarding matters of this kind.

What if I Buy My New Home Before My Old One Sells?

Chains can always complicate property transactions. For this reason, being able to move into a new property before the sale of your first one has gone through is, in many ways, an attractive prospect.

However, there are a number of risks inherent in this approach. For example, if you sell via an estate agent, there is an ongoing risk that the buyer will drop out of the transaction. This can happen any time up to the exchange of contracts.

Another risk is that your property will take a long time to sell. This means that, in the meantime, you will be responsible for costs relating to two homes.

In either case, you’re likely to find yourself paying for two mortgages for far longer than is desirable. This can become very expensive very quickly.

For this reason, unless you have budgeted carefully, it is worth pushing for as small a gap as possible between the purchase of your old home and the sale of your new one. Of course, this is not always possible. However, it is important that you know the risks involved if you are not able to control the sale in this way.

Talk to Property Solvers

Most sellers wish to achieve a quick sale of their property to avoid making payments on two homes at the same time. If you need to sell your home fast, get in touch with the team of experts at Property Solvers today.

We can provide you with a no-obligation up front cash offer. This may be worth up to 75% of your home’s fair market value. We’ll buy the property from you direct, so there is no need to wait for buyers to express interest. It is possible for us to close the sale in as few as seven days. There will be no solicitors’ fees and no estate agency charges to pay.

This will free you up to move into your new property, relieving you of any financial responsibility relating to your old one.

Property Solvers also has its own estate agency service and manages online auctions too. So, however, you prefer to sell, you can count on us to ensure a smooth, transparent and fuss-free process.

For further information about our fast homebuying service, contact us today. We will be happy to assist you.