This article is for general information only and does not constitute regulated mortgage advice. All mortgages are subject to status and lender criteria. Finance 4 Homes Ltd is an Appointed Representative of Beneficial Ltd, authorised and regulated by the Financial Conduct Authority (FCA No. 736655).
Falling behind on your mortgage can be one of the most stressful financial experiences imaginable. You might be receiving letters from your lender or worried about losing your home altogether. At this point, many homeowners ask the same question: Can I sell my house if I’m in mortgage arrears?
The short answer is yes, you can. In fact, for some, selling the property may be the best way to regain control of their finances and avoid further debt. But it’s important to understand what the process involves, what your options are, and how acting quickly can make a big difference to your outcome.
What Are Mortgage Arrears?
Mortgage arrears occur when you’ve missed one or more of your monthly mortgage payments. Most lenders treat arrears seriously because it suggests you’re struggling to keep up with the loan agreement.
If your payments remain unpaid, the arrears will continue to build up, and your lender may eventually start repossession proceedings. However, repossession is always a last resort. Most lenders would much rather work with you to find a solution before it reaches that stage.
Can You Sell a House with Mortgage Arrears?
Yes, you can sell your property even if you’ve fallen behind on payments. As long as your home has enough equity to repay the mortgage balance and any arrears, a sale can settle the debt in full and prevent further legal action.
Selling your home voluntarily—before repossession—puts you in control of the situation. It allows you to:
- Clear your mortgage debt with the proceeds of the sale
- Avoid repossession and further damage to your credit file
- Potentially retain any remaining equity after the mortgage and arrears are paid off
However, timing is crucial. The longer you wait, the higher your arrears can grow, and the fewer options you may have.
How the Process Works
Selling a home with mortgage arrears is similar to a standard sale, but there are a few extra steps and considerations:
- Contact Your Lender Early
Let your lender know you intend to sell. Lenders are often willing to pause legal action if you show genuine intent to clear the debt through a sale. - Get a Current Redemption Statement
This document details exactly how much you owe, including arrears, interest, and any fees. Your solicitor will use this to ensure the mortgage is repaid in full from the sale proceeds. - Instruct an Estate Agent and Solicitor
Choose professionals experienced in handling sales under financial pressure. They can help you move the process along efficiently. - Complete the Sale
Once your property sells, your solicitor will pay the lender directly from the sale proceeds. Any remaining balance (after fees and charges) is transferred to you.
If the sale doesn’t cover the full mortgage amount—known as negative equity—you may still owe money to your lender. In that case, you’ll need to agree on how the shortfall will be repaid.
What If You’re in Negative Equity?
If your home’s market value is less than what you owe on the mortgage, you’re in negative equity. This can make selling more complicated, but it’s not impossible.
Some lenders may agree to a shortfall sale, allowing the property to be sold for less than the outstanding mortgage. You’ll still need to repay the remaining balance, but lenders can sometimes agree to a repayment plan or, in rare cases, write off part of the shortfall.
Acting early and being transparent with your lender increases your chances of reaching a workable agreement.
How Arrears Affect the Sale Timeline
When you’re in arrears, time is of the essence. The longer arrears go unpaid, the greater the risk of repossession proceedings beginning. If your lender has already applied to court, selling quickly becomes even more urgent.
Working with a broker or adviser can help you move faster. They can liaise with your lender, manage communications, and ensure you’re exploring all possible alternatives—such as remortgaging, switching deals, or finding specialist lenders willing to refinance.
Alternatives to Selling
Before deciding to sell, it’s worth exploring whether other options could help you stay in your home.
- Speak to Your Lender
Many lenders offer temporary solutions, such as payment holidays or revised repayment plans, especially if your financial difficulties are short-term. - Remortgage or Switch to a New Lender
If you still have some equity and your income is stable, you may be able to remortgage—even with a history of missed payments. Specialist lenders look beyond credit scores and focus on affordability. - Government or Charitable Support
You might qualify for schemes such as Support for Mortgage Interest (SMI), or get free advice from organisations like StepChange or MoneyHelper.
The Role of a Specialist Mortgage Broker
If you’re in arrears, working with a specialist broker like Finance 4 Homes can make a real difference. We understand how stressful it can feel and help you explore all possible routes before resorting to a sale.
We can:
- Assess whether a remortgage or product switch could stabilise your situation
- Speak directly with lenders on your behalf
- Help you understand your options if a sale becomes the most practical solution
Our goal is always to find the path that protects your home and your financial wellbeing wherever possible.
Who Selling May or May Not Suit
This route may suit homeowners with growing arrears who have equity in their property and want to avoid repossession.
It may not suit those in negative equity or ongoing financial hardship where alternative support options could offer better protection.
Finance4Homes provides guidance only, not regulated mortgage or debt advice. Always seek advice tailored to your circumstances.
Key Takeaways
- You can sell your house even if you’re behind on your mortgage
- Acting early gives you more control and options
- If your property has equity, a sale can clear the mortgage and arrears in full
- Communication with your lender is essential
- Specialist brokers can help find alternatives before selling becomes necessary
We may charge a fee for arranging your mortgage. A typical fee could be up to 1 per cent of the loan amount, depending on circumstances. Your actual fee will be confirmed before the application.
Not all applicants with arrears will qualify for alternative lending options. Product availability, interest rates, and loan amounts depend on individual circumstances and lender criteria.
If you are experiencing financial difficulty, you can get free and impartial debt advice from organisations such as MoneyHelper, StepChange, or Citizens Advice.
Finance 4 Homes Ltd | Appointed Representative of Beneficial Ltd (Authorised and Regulated by the Financial Conduct Authority – FCA 736655) | For UK consumers only | Registered in England No. [insert] | Last updated October 2025.
