Selling your home voluntarily

You may decide to sell your home to pay off your mortgage arrears.

You should continue to pay your mortgage (and any arrears, if you can) until the property is sold, and you may need your lender’s agreement if you have negative equity. You will also need to find somewhere else to live and money for the costs involved in buying or renting.

Do I need to keep paying my mortgage?

If you are thinking of selling your home, it is still important to continue to pay as much as you can towards your mortgage. If you don’t pay, your lender may decide to take you to court to evict you. If this happens, you may have to pay expensive legal fees (for yourself and your lender) on top of everything you originally borrowed.

Selling may take a long time, so it may be difficult to keep up your monthly payments until the sale is completed. If you have problems, get help from a debt adviser.

Getting a valuation

To help you decide whether selling is the right option, you need to know how much your home is worth. Many estate agents provide free valuations, which tell you how much your home is likely to sell for. This will help you work out whether selling your home will mean you can pay off your debts.

The difference between what your home is worth and how much you owe on your mortgage is called equity . If your home is worth more than the amount you owe, it may make negotiating with your lender easier. If it is worth less than what you owe, you are in negative equity. This might be the case if:

  • property prices have fallen since you bought your home, or
  • you have large mortgage arrears, which mean that your total debt adds up to more than the current value of your home.

If you have negative equity and you sell your home, you will still have to repay the full amount that is outstanding on your mortgage. Your lender can take legal action against you to get back any unpaid debts, even after the property is sold.

Getting permission to sell

If the money from the sale isn’t likely to pay off your mortgage, you normally need your lender’s permission to sell your home. It may be easier to get this if you can show them plans to convince them you can realistically pay off everything you owe. If you had to take out a mortgage indemnity guarantee when you bought the property, your lender can claim any shortfall from the insurance company, but you will still be responsible for the debt.

If you have used your home as collateral for any other secured loans, you may also need permission from the lender who provided them.

Get help from a debt adviser if you can’t get permission to sell. An adviser may be able to help you negotiate with your lender or other creditors. If you still can’t get permission to sell, it may be possible to get a court order allowing the sale to go ahead.

Stopping repossession

If your lender decides to go ahead with court action and won’t give you permission to sell your home privately, get help immediately.

You may be able to get an order from the court postponing the eviction to give you time to sell your home. You will have to give the court a reason for stopping the eviction. If you have a buyer, you may be able to argue that your lender is being unreasonable and that you are more likely to be able to clear your debts if you sell your home yourself.

Costs of selling

There are lots of costs involved in selling your home (and in buying somewhere else if you decide to do so). You will have to pay some of the costs involved before the sale is final.

If you are on Universal Credit, income support (IS) or income based jobseekers allowance (JSA), any money you get from the sale after your mortgage has been paid off may be counted as capital, and your benefits reduced or stopped. It is still important to informUniversal Credit or the DWP when you sell your home. If you don’t, you will probably have to pay back any benefits that you weren’t entitled to.

If the value of the property has increased since you bought it and it is not your main home (for example if it has been rented to tenants), you may have to pay capital gains tax when the sale is completed. This can be expensive.

Finding somewhere else to live

If you decide to sell your home, you need to find alternative accommodation that you can afford. This could be through:

  • staying with family or friends
  • buying a cheaper property
  • renting from a private landlord
  • asking the local council for help because you are homeless.

The council have legal duties to help people who are homeless or threatened with homelessness within 56 days.  If you’re struggling to pay your mortgage, you should contact the council to see if they can help prevent you from losing your home.

If it’s not possible to keep your home, the council will have a duty to help you to find somewhere else to live.  The council will only have to provide you with accommodation while they help you find somewhere else if you are in priority need, eg if you have dependent children, you/your partner is pregnant, or if you have a disability or are vulnerable in some way.

The council’s duties to help you are likely to be for a limited time if they decide that you are intentionally homeless if you lost your home because you didn’t pay your mortgage.  The decision will depend on your particular circumstances, not just the fact that you couldn’t pay your mortgage. If there was a reason you were unable to pay your mortgage (for example, if your problems were caused because you lost your job, split up with your partner or became ill), then the council shouldn’t decide you are intentionally homeless. Get help urgently if the council tell you they are likely to decide you are intentionally homeless. You can ask for them to review the decision within 21 days of being notified.

If you think you will need to apply to the council for help, get help before the sale is final. An adviser may be able to help you convince the council that you did everything you could to keep your home.

See the section on homelessness for more information on when a local council must help you.

We are sorry that we cannot provide this information in Welsh, however if you would like to speak to an adviser in Welsh please contact 08000 495 495.

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This page was last updated on: June 9, 2023

Shelter Cymru acknowledges the support of Shelter in allowing us to adapt their content. The information contained on this site is updated and maintained by Shelter Cymru and only gives general guidance on the law in Wales. It should not be regarded or relied upon as a complete or authoritative statement of the law.