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Can You Sell Your House If You Have Mortgage Arrears?

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Can You Sell Your House If You Have Mortgage Arrears?
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The question “Can I sell my house if I have mortgage arrears” is a common one in the UK. With the rising cost of living, and the end of ‘mortgage holidays’, falling into mortgage arrears is unavoidable for some.

But what are mortgage arrears? And can you sell your house if you have them?

Keep reading to find out more about mortgage arrears and the impact this has on selling your house. 

What are Mortgage Arrears?

You fall into mortgage arrears once you miss one payment, as you haven’t provided payment for the previous month. Your lender won’t take repossession action after one missed payment – in fact, they’ll typically have a grace period of around 10 to 15 days. If you pay the missed payment in this period, it won’t count as a late payment. 

How many months of mortgage arrears before repossession?

It takes three months of missed mortgage payments before lenders will take action to repossess a house. Repossession is a last resort for most lenders and one or two missed mortgage payments won’t result in repossession. 

If you’ve only missed one or two payments, you will still be in arrears, however you can work with your lender to come up with a solution. Missing mortgage payments is incredibly stressful so contacting your lender as soon as possible is best, as they’re keen to provide help in these circumstances. Your lenders want to be paid so they’re usually helpful.

Checking in with your lender is key in this situation as they can usually offer you a solution if your financial problems are temporary. Communicating with them and making it clear how much you can currently pay, and how much you’re willing to repay your mortgage payments, will help them work with you to come up with a solution. Your lender could provide several solutions such as switching to an interest-only mortgage or adding your arrears to the mortgage. 

Another solution you might consider is renting out a room or part of your house. You can start making money through this avenue fairly quickly if you advertise on online marketplaces. Just make sure you carry out your due diligence to keep you and your home safe. 

If you can’t come to a workable solution with your lender or you’ve missed too many payments and you’re worried your house may be repossessed, you may want to sell your house as fast as you can. Selling a house can often seem like a lengthy and complicated ordeal but in lots of cases, selling a house fast suits both the buyer and seller. 

Can I sell my house with mortgage arrears?

Yes, you can sell your house even with mortgage arrears. Often, this is the best option as it means you avoid your house being repossessed and you can pay off any debts incurred. Selling your house means you can release some of the equity and any leftover cash can be used towards a more affordable property or rent if you need to. 

Selling your house before it’s repossessed is a better option, as you can still find yourself in a financially difficult position as your house will be put up for auction. Typically, repossessed houses at auctions are sold for a much lower price. If this isn’t enough to cover the arrears, you’ll still be responsible for paying it off. 

Avoiding repossession is key to securing yourself some financial stability and avoiding any further debts. A critical way to stop your house being repossessed is by communicating with your lender. They will get in touch regarding any missed payments but avoiding them, or not seeking out a solution that works for both parties, will not work out in your favour.  

Is a mortgage paid in arrears?

Yes, unlike most other purchases or other housing situations such as renting, your mortgage payments are made after the fact. For example, if you pay your mortgage on the first of each month, you are paying for the previous month. Whereas, if you were renting, your payment on the first of the month is usually for that month. 

You fall into mortgage arrears once you miss one payment, as you haven’t provided payment for the previous month. Your lender won’t take repossession action after one missed payment, in fact, they’ll typically have a grace period of around 10 to 15 days. If you pay the missed payment in this period, it won’t count as a late payment. 

Once you’ve gone past the grace period, a late fee will often be applied, which is usually around 5 to 10% of your monthly mortgage payment. If you’re struggling to pay this, you must contact your lender straight away. If you’re struggling to pay because of a temporary difficult situation, they can often help you out. If the situation isn’t temporary, selling your house is a good way to avoid repossession and pay off any debts. 

Once you’ve missed three months of mortgage payments, your lender can start action to repossess your home. Contacting your lender before this period or taking action to sell your home before or around the three-month mark is key to preventing any further financial issues. 

Sell your property with WeBuyAnyHome

WeBuyAnyHome are chain-free cash house buyers who can help you to sell your property fast.

Using our own funds, we will purchase your property at a set price, by a date of your choosing, fully managed from beginning to end.

If you want more guidance on preventing house repossession, then you have come to the right place.

Fill in our enquiry form below if you are interested in getting a cash offer for your house.

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