The Quick Answer: Yes
Yes, you can sell your home if you’re in mortgage arrears. Absolutely.
Your lender does not want your house. They want their money back. A voluntary sale (where you sell the property, the mortgage is repaid from the proceeds, and you deal with the situation on your own terms) isn't just possible. It's the outcome most lenders actively prefer over repossession.
This page explains exactly how it works, what happens to the proceeds, and why selling voluntarily is almost always a better outcome than waiting for repossession.
How a Sale Works When You’re in Arrears
The process is identical to a normal property sale, whether that's through an estate agent, a cash buyer or auction. The key difference is where the money goes at completion.
When the sale completes, your solicitor distributes the proceeds in this order:
- Outstanding mortgage balance, the remaining capital you owe
- Mortgage arrears, the missed payments, including any accrued interest
- Your lender’s costs, any fees they’ve incurred (administration, legal costs if proceedings have started)
- Anything remaining. This is your equity, and it belongs to you
If the sale price covers all of the above, you walk away with a clean break. Mortgage gone. Arrears cleared. No further liability. That’s a genuine fresh start.
What If the Sale Price Covers Everything?
This is the best outcome, and for many Wirral homeowners who bought even five to ten years ago, it’s achievable. Average Wirral property prices have risen significantly over the past decade, so even after the costs of a sale and clearing the arrears, there may be meaningful equity left.
A worked example:
| Property value | £185,000 |
| Outstanding mortgage | £140,000 |
| Arrears (6 months at £800/month) | £4,800 |
| Lender’s legal costs (if proceedings started) | £1,500 |
| Estate agent fees (1.5% + VAT) | £3,330 |
| Solicitor fees | £1,500 |
| Total to pay out | ~£151,130 |
| Equity to you | ~£33,870 |
That’s over £33,000 to start again: to rent somewhere, pay deposits and build back. That’s not nothing. That’s a real fresh start.
What If There’s a Shortfall?
It’s honest to address this, because for some people the numbers don’t quite add up.
If the property sells for less than the total debt, you still owe the difference. This is the mortgage shortfall, and it’s a real concern. Your lender can pursue it.
But, and this matters, a shortfall from a voluntary sale is almost always smaller than a shortfall from repossession, for one simple reason: you got a better price.
Repossessed properties typically sell at auction for 10–25% below market value. If your property is worth £185,000 but gets £148,000 at a repossession auction, your shortfall is much larger. If you sold it voluntarily for £175,000, even at a slight discount through a cash buyer, the shortfall is smaller, or may not exist at all.
If you do face a shortfall after a voluntary sale, these options exist:
- Negotiated settlement. Many lenders will accept a reduced lump sum to close the account, especially if you have no other assets
- Affordable repayment plan, spreading the shortfall over time
- Breathing Space, if you need time to deal with multiple debts, the 60-day scheme can pause action on the shortfall too
- Insolvency options: in more serious cases, a Debt Relief Order, Individual Voluntary Arrangement, or bankruptcy may be appropriate. These are significant steps and need proper advice first
Getting free debt advice before selling, not instead of it, is sensible if shortfall is a real concern. An adviser can help you understand what the shortfall might be, whether a negotiated settlement is realistic with your lender, and what your position looks like on the other side.
- StepChange, 0800 138 1111
- National Debtline, 0808 808 4000
- Citizens Advice, 0800 144 8848
See our guide to mortgage arrears options for the full list of free services that can help.
Does Your Lender Have to Agree?
Technically, yes. Your lender holds a legal charge over your property, which means any sale requires their consent. In practice, this is almost never a problem.
Here’s why: your lender’s goal is to get their money back. A voluntary sale at proper market value achieves that better than a repossession auction. Every solicitor acting on a sale where there’s a mortgage simply notifies the lender and requests a redemption figure, the exact amount needed to clear the debt at completion. The lender provides this, the sale goes ahead, and the mortgage is cleared on completion day.
Where things can get more complicated is if possession proceedings have already started and a court order is in place. In that case, your solicitor may need to write to the court to confirm a sale is progressing, and the court may require evidence of the sale before staying the order. This is manageable. Courts are generally happy to allow time for a genuine sale to complete. If you’re in this position, your solicitor will guide you through what needs to happen.
The bottom line: your lender wants the money, not an empty property. Agreeing to your sale is almost always in their interest.
Why Selling on Your Terms Beats Repossession
If you’re weighing up whether to sell now or see what happens, here’s the comparison.
| Voluntary sale | Repossession | |
|---|---|---|
| Sale price | Market value (or near it) | 10–25% below market value |
| Equity you keep | Whatever’s left after debt | Often nothing, larger shortfall |
| Credit file | Arrears noted, but sale is a normal transaction | Repossession recorded for 6 years |
| Future renting | Possible, landlords see you addressed the problem | Very difficult, most landlords credit check |
| Future mortgage | Possible within a few years | Near-impossible for 6+ years |
| Your timeline | You decide when and how | Dictated by the court process |
| The experience | You hand over the keys | Bailiffs, eviction, locks changed |
The credit file comparison is particularly significant. We cover this in detail in our guide to how selling protects your credit score, but the short version is: the sooner you sell and clear the debt, the sooner your credit record starts recovering.
Does Speed Matter?
Yes, for two reasons.
First, every month you delay is another missed payment on your credit file. Arrears of one or two months look different to arrears of eight months. Acting now limits the damage.
Second, your options narrow as time passes. The Pre-Action Protocol process, the Mortgage Charter protections and the ability to avoid court proceedings entirely all work best when you engage early. If a possession hearing has already been scheduled, you’re working against a fixed deadline.
If you want to sell quickly, a cash buyer can complete in two to four weeks. There are no chains, no mortgage surveys, no buyers who might change their mind. You agree a price, the mortgage is cleared at completion, and it’s done.
The trade-off is price: a cash buyer will offer below full market value, typically 75–85%. But on a property with arrears, where the alternative is a forced sale at 75–90% of market value with none of the benefits, the difference is often smaller than it looks.
If you have more time and the property is in good condition, an estate agent can achieve a better price, but expect the process to take three to six months. That’s three to six more months of arrears accruing.
What to Do Next
If you’ve decided selling is the right route, or if you want to understand what it would look like before you decide, the next steps are:
Get a valuation. You need to know what the property is worth and what equity you’d have after clearing the debt. Two or three estate agent valuations, or a direct conversation with a cash buyer about what they’d offer, gives you the picture.
Get your mortgage redemption figure. Your lender can give you a figure showing exactly what needs to be repaid to clear the mortgage at any given date. This is the number your solicitor will use at completion. You can request this directly from your lender by phone. Most will provide it within a few days. For Wirral properties, where values have held up well, many homeowners are surprised to find more equity remaining than they expected.
Tell your solicitor early. If proceedings have started, they need to know so they can communicate with the court. If you want to understand what happens if it goes that far, see our guide to what happens when a house is repossessed.
Get debt advice if there might be a shortfall. StepChange (0800 138 1111) or National Debtline (0808 808 4000) can help you understand your position and what the shortfall options are before you commit to anything.
You don’t have to have it all figured out before you reach out. Most conversations start with “I’m not sure what I can afford and I need to know what my options are.” That’s enough to start.
Once you have your redemption figure, the other number you need is what the property would sell for. Tell us about it and we'll give you a realistic answer, in confidence.