Can you sell your home whilst in mortgage arrears?

I have been asked if it is possible to sell your house when in mortgage arrears and the short answer is yes, but there are a few things that need to be considered, like the following:

The First Step is probably understanding the depth of your arrears. The gravity of being in arrears isn’t just in the missed payments but in the accruing interest and fees, widening the gap between the homeowner and financial stability. Before considering selling your home, it’s really important to have a clear picture of the total debt, including any late fees and legal costs, as this will influence the decision-making process and the urgency of the sale.

Often, the thought of engaging with the lender while in arrears can often bring about a sense of dread, but communicating with your lender creates a vital bridge. Many lenders prefer to avoid the lengthy and costly process of repossession and may offer temporary relief options, such as payment holidays or loan modifications, which can provide homeowners with the breathing space needed to arrange a sale without the immediate threat of eviction.

If you reach the decision to sell your home because of the arrears and being under financial duress, you should assess whether the market conditions favour sellers or buyers, as this will impact both the price that can be reasonably expected and the speed at which a sale can be concluded. In a buyer’s market, finding a quick sale might require pricing the property below market value, whereas a seller’s market could offer more favourable conditions for recouping the necessary funds to clear your arrears.

Selling a home in arrears presents unique challenges, but also opportunities for creative solutions. Traditional real estate agents can offer valuable guidance, yet their timelines and fees may not align with your immediate needs. Alternatively, selling the property at auction or to companies specialising in quick sales might provide a faster resolution, albeit often at a lower price. These expedited routes can be particularly appealing if you’re looking to avoid the additional financial strain of ongoing mortgage payments and potential legal actions.

The legal and financial intricacies of selling a home in arrears require careful navigation. You should always seek advice from professionals to understand the implications of the sale, including any potential for remaining debt obligations after the property is sold. For example, if the sale price doesn’t cover the outstanding mortgage and fees, you might still owe the remaining balance to your lender.

The process of selling a home while in mortgage arrears has many challenges, but it is not impossible. With informed decisions, open communication with your lender, and the right guidance, you can find your way through to a new beginning and emerge from financial distress with new insights and renewed hope.