Selling a Home with Mortgage Arrears

Mortgage arrears are stressful at the best of times. If you find yourself in this situation, then it’s important to take a breath.

Mortgage arrears are serious, but they don’t mean you’re out of options. In many cases, you can still agree a plan with your lender, get independent debt advice, or sell the property before matters go further.

The worst thing to do is ignore it. The earlier you act, the more control you usually have, so don’t stick your head in the sand. So, if you’re wondering, ‘Can I sell my house with mortgage arrears?’ then read on.

What are mortgage arrears?

‘Mortgage arrears’ means that you have missed a mortgage payment or haven’t paid the full amount due. Arrears can start from the first missed payment – you don’t need to be six months behind for it to count.

That said, one missed payment is very different from a long-running arrears problem. If you’ve only just fallen behind, there may be more room to agree on a repayment plan.

If you’ve already received court or possession-related letters, the situation is far more urgent. Either way, speak to your lender.

Contact your lender early

Nobody enjoys ringing the bank to say they cannot pay, but lenders always prefer contact to silence.

If you know you may miss a payment, call before it happens. If you’ve already missed one, call as soon as possible.

Your lender will want to understand what has changed, what you can afford, and whether the problem is temporary or long term.

They may discuss options for repayment. You should also speak to organisations such as Citizens Advice, MoneyHelper, Shelter, or StepChange for independent advice.

Can I sell my house with mortgage arrears?

Yes, in many cases, you can sell your house with mortgage arrears. The key question is whether there’s enough time for the sale to complete before repossession or lender restrictions make things complicated.

If you get it over the line, you can then use the selling funds to pay off your remaining arrears. If you wait too long, though, there could be additional fees, legal costs, credit file impact, reduced control, and the lender potentially selling the property to recover the debt.

When the property sells, your solicitor will request a redemption statement from the lender. This shows the full amount needed to repay the mortgage, including the remaining balance, arrears, interest and any charges. On completion, the solicitor repays the lender from the sale proceeds before sending any remaining money to you.

If the sale price is high enough to clear the mortgage and arrears, that can bring the problem to an end. If it isn’t, you may be left with a shortfall, which still needs dealing with.

Selling before repossession

Selling before repossession normally gives you more control. You can choose the sale route, compare offers, decide whether to use an estate agent or a cash buyer, and aim for a price that works for your wider situation.

Once repossession progresses, your choices can narrow significantly. Legal costs may rise, stress increases, and your lender could eventually take control of the sale.

If you’re actively trying to sell to pay off your debt, your lender might take that into account. You may need to show the property is on the market, provide details, and allow your estate agent or conveyancer to speak with the lender.

What if repossession has already started?

Mortgage arrears repossession is a process, not usually a single overnight event. Before taking court action, lenders should consider reasonable alternatives and follow proper steps.

They may need to provide details of missed payments, the total debt, charges and arrears information.

If you’ve received possession-related correspondence, don’t put it in a drawer. Read it, call the lender, and get debt advice immediately. Missing deadlines can make matters worse, and it could stop you selling the house.

How many months of mortgage arrears before repossession?

How many months of mortgage arrears before repossession depends on your lender, your circumstances, whether you engage with them, and whether a repayment plan is possible.

Mortgage arrears repossession should generally be a last resort, not the lender’s first move. Waiting for a magic number of missed payments is dangerous, though. One missed payment deserves attention, while several missed payments need urgent action.

Court letters mean you should get help straight away.

If you have missed one payment

Contact the lender, explain what happened, and ask what options are available. If the issue was temporary, such as a delayed wage, you may be able to catch up.

Don’t borrow impulsively to make the problem disappear for a month. High-cost credit can turn a short-term mortgage problem into a bigger debt problem.

If you have missed several payments

At this stage, you need a clear affordability picture. Work out your income, essential spending, other debts and what you can realistically offer.

This is also the point where selling may need to be considered seriously. Some homeowners decide to sell their house to pay off debt because keeping the property has become unaffordable.

If you have received court or possession letters

If possession action has started, get advice immediately. Contact your lender, respond to paperwork, and speak to a debt adviser or solicitor. If you want to sell a house with mortgage arrears, tell the lender and ask what evidence they need.

Don’t assume a normal sale will complete in time unless the timescale is realistic. Chains collapse and mortgage buyers get delayed. In arrears situations, those risks matter more.

Alternatives to selling

Depending on your circumstances, you may be able to agree on a repayment plan or make temporary payment changes.

You could also extend the mortgage term, switch to interest-only payments for a period, or capitalise arrears by adding them to the mortgage balance.

You may be eligible for Support for Mortgage Interest (SMI). This helps with mortgage interest for eligible people on certain benefits. You could also explore any additional government support initiatives for mortgage arrears help.

Other options include remortgaging, renting out a room, reducing other costs, selling non-essential assets, or reviewing debts with an adviser.

Debt consolidation and remortgaging are not suitable for everyone. You should seek independent financial advice before taking on new borrowing.

Traditional sale or cash buyer?

A traditional estate-agent sale may achieve the best price. If you have enough time, a good agent, strong buyer demand and a realistic asking price, it can be the right route.

Unfortunately, selling a home with mortgage arrears isn’t always a ‘normal sale’. If time is tight, a cash house buyer can offer a faster, chain-free sale. The advantage is speed and certainty, while the trade-off is price, because a genuine cash buyer will usually offer less than full open-market value.

That trade-off doesn’t suit everyone, but if the alternative is mounting arrears, legal costs, and repossession risk, it’s often worth considering.

What if the sale price doesn’t cover the mortgage?

If the property sells for less than the mortgage and arrears owed, the remaining balance is called a shortfall. You may still be responsible for paying it.

In some cases, you could need your lender’s permission to sell if the sale will not clear the mortgage. If you’re in this position, get proper advice before agreeing to anything.

You remain responsible for the remaining debt during a shortfall. Even after the sale completes, your bank still holds you liable for what remains. You can be taken to court, unless you agree on a repayment plan, or insurance gets involved.

If repossession is a concern, read We Buy Any Home’s Stop the Repossession of Your Home guide for practical next steps. You could also read our guide on how many months of mortgage arrears before repossession.

Frequently Asked Questions

Can I sell my house if I am in mortgage arrears?

Yes, you can usually sell, provided there’s enough time and the lender can be repaid from the sale proceeds.

Will my lender let me sell?

Often, yes, especially if selling is a realistic way to repay the mortgage. Keep the lender informed and ask what they need from you.

What happens if the sale price does not cover the mortgage?

You may be left with a shortfall debt. This doesn’t simply disappear, so get independent debt advice first.

Can I sell before repossession?

Yes, many homeowners can sell before repossession, but timing is critical. The earlier you act, the more options you’re likely to have.

Should I sell to pay off mortgage arrears?

It depends. If the mortgage is no longer affordable, selling may reduce pressure and prevent matters worsening. You should compare alternatives and take advice first.