Conveyancing for Remortgage: What Sellers Need to Know
Most UK homeowners sell with an existing mortgage still on the property. This guide explains exactly how the mortgage redemption process works during a sale, what your solicitor does with the mortgage, how the proceeds are distributed on completion day, and what to watch out for with early repayment charges, negative equity, and multiple charges.
What you need to know
When you sell a property with an outstanding mortgage, your solicitor obtains a redemption statement from your lender, redeems the mortgage from the sale proceeds on completion day, and transfers the remaining balance to you. The process involves daily interest calculations, potential early repayment charges, and a formal legal undertaking from your solicitor to the lender.
- Your solicitor handles the entire mortgage redemption process, including obtaining the redemption statement, giving an undertaking to the lender, and paying off the mortgage from the sale proceeds on completion day.
- A mortgage redemption statement is only valid for a specific date because interest accrues daily -- if completion is delayed, the figure increases.
- Early repayment charges (1% to 5% of the balance) only apply if you are still within your fixed-rate or discounted-rate deal period.
- If you have multiple mortgages or secured loans, all charges must be cleared from the sale proceeds in priority order before you receive anything.
- Porting your mortgage to a new property can help you avoid early repayment charges, but it is not guaranteed and your lender will reassess your affordability.
Pine handles the legal prep so you don't have to.
Check your sale readinessAround two-thirds of UK homeowners selling a property still have a mortgage on it. If that includes you, understanding how the mortgage fits into the conveyancing process is essential. It affects how much you walk away with, how your solicitor manages the transaction, and whether you face unexpected charges on completion day.
This guide covers everything UK sellers need to know about selling with a mortgage: the redemption process, daily interest, early repayment charges, how your solicitor handles the lender, and what happens with the proceeds. It also explains what happens if you are in negative equity, have multiple charges on the property, or want to port your mortgage to a new home.
This guide covers residential property sales in England and Wales. For a broader overview of the conveyancing timeline, see our guide to how long conveyancing takes.
What happens to your mortgage when you sell
Your mortgage is a secured loan. The lender holds a legal charge registered against your property at HM Land Registry. This charge gives the lender the right to be repaid from the sale proceeds before you receive anything. Until the mortgage is repaid in full, the lender's charge remains on the title and the buyer cannot obtain clean ownership.
When you sell, your solicitor manages the mortgage redemption as part of the conveyancing process. They obtain the exact payoff figure from your lender, arrange payment on completion day, and ensure the lender's charge is removed from the title after completion. You do not need to contact your lender separately to arrange repayment -- your solicitor handles all of this on your behalf.
For a detailed explanation of everything your solicitor does during a sale, see our guide on what your solicitor actually does when you sell.
The mortgage redemption process step by step
Here is how the mortgage redemption process works during a typical property sale:
- You instruct a solicitor. When you instruct your solicitor to act on the sale, you provide details of your mortgage lender and account number. Your solicitor will also ask for your mortgage offer or latest annual statement.
- Your solicitor requests the redemption statement. After exchange of contracts (or sometimes earlier), your solicitor writes to your lender requesting a formal redemption statement. This is a document showing exactly how much is needed to pay off the mortgage on a specific date.
- The lender provides the statement. Most lenders respond within five to ten working days. The statement includes the outstanding capital, accrued interest, any early repayment charge, the lender's administration fee, and the daily interest rate for adjustments.
- Your solicitor prepares the completion statement. The mortgage redemption figure is added to your completion statement, alongside all other deductions (estate agent fees, solicitor fees, disbursements). This shows your net proceeds.
- On completion day, the mortgage is redeemed. The buyer's solicitor sends the purchase price to your solicitor. Your solicitor immediately pays off the mortgage via CHAPS bank transfer, then distributes the remaining funds.
- The lender removes its charge. After receiving the redemption payment, your lender confirms the mortgage is closed and submits a discharge of the legal charge (known as a DS1 or e-DS1) to HM Land Registry. This removes the mortgage from the title register.
What is a mortgage redemption statement?
A redemption statement (sometimes called a "settlement figure" or "payoff statement") is a formal document from your mortgage lender confirming exactly how much you need to pay to close the mortgage account. It is different from your regular mortgage statement, which shows your monthly payments and balance.
A typical redemption statement includes the following components:
| Component | What it means | Typical amount |
|---|---|---|
| Outstanding capital balance | The remaining principal you owe on the mortgage | Varies (your remaining balance) |
| Accrued interest | Interest from your last payment date to the redemption date | Calculated daily (see below) |
| Early repayment charge (ERC) | Penalty for paying off the mortgage before the deal period ends | 0% to 5% of the balance (if applicable) |
| Administration / deeds release fee | The lender's charge for closing the account and releasing the title deeds | £50 to £300 |
| Daily interest rate | The amount added for each day completion is delayed beyond the statement date | Varies by balance and rate |
| Total redemption figure | The full amount your solicitor must send to clear the mortgage | Sum of all the above |
The redemption statement is only valid for a specific date -- usually the planned completion date. If completion is delayed, your solicitor uses the daily interest rate on the statement to calculate the adjusted figure. For example, if the daily rate is £18.50 and completion slips by three days, the redemption figure increases by £55.50.
When to request a redemption statement
Your solicitor typically requests the redemption statement after exchange of contracts, once the completion date is confirmed. Some solicitors request it earlier in the process to give you a clearer picture of your net proceeds. You can also request one yourself directly from your lender at any time -- this is useful before you even put the property on the market, so you know roughly how much you will walk away with.
Early repayment charges explained
An early repayment charge (ERC) is a fee your lender charges if you pay off the mortgage before your deal period ends. ERCs are one of the most significant costs sellers overlook, and they can run into thousands of pounds.
ERCs apply during fixed-rate, tracker, or discounted-rate deal periods. Once your deal ends and you move to your lender's standard variable rate (SVR), there is usually no ERC. The charge typically decreases each year of the deal:
| Year of fixed-rate deal | Typical ERC percentage | ERC on a £200,000 balance |
|---|---|---|
| Year 1 | 5% | £10,000 |
| Year 2 | 4% | £8,000 |
| Year 3 | 3% | £6,000 |
| Year 4 | 2% | £4,000 |
| Year 5 | 1% | £2,000 |
| After deal period ends | 0% (usually) | £0 |
These figures are illustrative -- your actual ERC depends on your specific mortgage product. Some lenders use flat percentages across the entire deal, while others use the declining scale shown above. Check your mortgage offer document or call your lender to get the exact figure. For a full explanation, see our guide on early repayment charges on mortgages.
Can you avoid an early repayment charge?
There are several ways to reduce or avoid an ERC:
- Wait for your deal to end. If your fixed rate expires in a few months, delaying the sale could save you thousands. Even listing while still in the deal may work, because the conveyancing process typically takes 12 to 16 weeks.
- Port your mortgage. If you are buying another property, you may be able to transfer your existing deal to the new home (more on this below).
- Use permitted overpayments. Some mortgage products allow you to overpay by up to 10% of the balance per year without incurring an ERC. This does not eliminate the charge but reduces the balance it is calculated on.
- Negotiate with your lender. In rare cases, particularly where you are in financial hardship, lenders may waive or reduce the ERC. This is not common, but it is worth asking.
How daily interest is calculated
Understanding daily interest helps you see why the redemption figure changes with every day that passes. The calculation is straightforward:
Daily interest = (Outstanding balance x Annual interest rate) / 365
For example, on a £180,000 mortgage at 4.5% interest:
- Annual interest: £180,000 x 0.045 = £8,100
- Daily interest: £8,100 / 365 = £22.19
This means every day of delay adds £22.19 to the amount your solicitor must pay to redeem the mortgage. Over a two-week delay, that is an extra £310.66. This is why your solicitor obtains the redemption figure as close to completion as possible and why a smooth, well-prepared conveyancing process matters. For tips on avoiding delays, see our guide on how long conveyancing takes and how to speed it up.
What your solicitor does with the mortgage
Your solicitor's role in the mortgage redemption process is central to the sale. Here is what they handle:
- Requesting the redemption statement from your lender and checking it is accurate and valid for the correct date.
- Giving an undertaking to the lender. This is a formal, legally binding promise that the mortgage will be repaid from the sale proceeds on completion day. Undertakings are regulated by the Solicitors Regulation Authority (SRA) and a solicitor who fails to honour one faces disciplinary action.
- Including the figure on your completion statement so you can see exactly how much will be deducted from the sale price.
- Sending the redemption payment to your lender via CHAPS transfer on completion day, usually within hours of receiving the purchase funds.
- Confirming the discharge of the lender's charge at HM Land Registry after completion. Your lender submits a DS1 (paper) or e-DS1 (electronic) form to remove the charge from the title.
Because of the undertaking system, your lender does not need to be physically present or directly involved on completion day. The entire process runs through your solicitor. For more on the role of undertakings, see our guide on what your solicitor actually does.
How proceeds are distributed on completion day
On completion day, the buyer's solicitor sends the full purchase price (minus the deposit already held) to your solicitor via CHAPS bank transfer. Your solicitor then distributes the funds in the following order:
- Mortgage redemption -- the full amount owed to your lender, including capital, interest, any ERC, and administration fees.
- Estate agent commission -- your agent's fee including VAT, as per your agency agreement.
- Solicitor's fees and disbursements -- their legal fee, Land Registry copy charges, CHAPS transfer fees, ID verification costs, and any other disbursements.
- Any other secured debts -- if there are second charges or other secured loans, these are paid next.
- Net proceeds to you -- whatever remains after all deductions is transferred to your bank account, usually arriving the same day or the next working day.
Your solicitor sets all of this out in advance on your completion statement, which you should receive two to five working days before completion. Always check the figures carefully before the day. For a full picture of what happens on the day itself, see our guide to what happens on completion day for the seller.
Selling with multiple mortgages or charges
Some properties have more than one charge registered against them. This is common if you have taken out a second mortgage, a secured personal loan, or a Help to Buy equity loan. Each charge has a priority ranking at HM Land Registry, and they must be cleared in order.
Your solicitor will obtain a redemption statement from every lender with a charge on the property and ensure all debts are paid from the sale proceeds. The first charge holder (usually your main mortgage lender) is paid first, then the second charge holder, and so on.
If the sale proceeds are not enough to cover all charges, you will need to make up the difference from your own funds before completion can go ahead. Your solicitor will flag this situation early in the process so you have time to arrange the additional money or negotiate with your lenders.
For a more detailed explanation of selling when you still owe money on the property, see our guide to selling with an outstanding mortgage.
What happens if you are in negative equity
Negative equity means your property is worth less than the outstanding mortgage balance. For example, if your home is valued at £180,000 but you owe £200,000, you are £20,000 in negative equity.
In this situation, you cannot sell the property without your lender's consent because the sale proceeds will not cover the mortgage. Your solicitor cannot give the lender an undertaking to redeem the mortgage from the sale funds if those funds are insufficient.
You have several options:
- Consent to sell at a shortfall. Your lender may agree to let you sell if you arrange to repay the difference through a personal loan or an agreed payment plan. This is sometimes called a "short sale" and requires direct negotiation with the lender.
- Transfer the shortfall. Some lenders allow you to transfer the negative equity to a new mortgage if you are buying another property, though this is increasingly rare.
- Wait for values to recover. If you are not under pressure to sell, waiting for property values to rise may be the simplest option. During this time, you continue making mortgage payments that reduce the balance.
- Seek debt advice. If you are in financial difficulty, organisations such as Citizens Advice and StepChange offer free, confidential guidance on dealing with negative equity and mortgage debt.
Porting your mortgage
Porting means transferring your existing mortgage deal to a new property. If you are buying and selling at the same time, porting can save you from paying an early repayment charge because you are not actually paying off the mortgage -- you are moving it.
However, porting is not automatic. Your lender will:
- Reassess your affordability under current lending criteria, which may have tightened since you originally borrowed.
- Value the new property to confirm it meets their lending requirements.
- Require the sale and purchase to complete on the same day, so there is no gap in the security.
If the new property costs more than the old one, you will likely need to borrow additional funds. This top-up is usually on a separate rate from your ported deal. If the new property costs less, you may need to repay part of the mortgage, which could trigger a partial ERC.
According to Financial Conduct Authority (FCA) guidance, lenders are not obliged to offer porting and can refuse the application. Speak to your lender early in the process to find out whether porting is an option for you.
Remortgage conveyancing vs sale conveyancing: what is the difference?
Sellers sometimes confuse "remortgage conveyancing" with the mortgage element of a sale. They are quite different processes:
| Factor | Remortgage conveyancing | Sale conveyancing |
|---|---|---|
| What is happening | Switching lender on the same property | Selling the property to a buyer |
| Ownership change | No -- you keep the property | Yes -- ownership transfers to the buyer |
| Parties involved | You, old lender, new lender | You, buyer, your lender, buyer's lender, estate agent |
| Property searches | Usually not required (or limited) | Full search pack required by buyer |
| Contract exchange | Not applicable | Required -- legally binding commitment |
| Estate agent | Not involved | Usually involved (paid from proceeds) |
| Typical solicitor fee | £300 to £600 + VAT (often paid by the new lender as an incentive) | £800 to £1,500 + VAT |
| Typical timeline | 4 to 8 weeks | 12 to 16 weeks |
The mortgage redemption element is similar in both cases -- in each scenario, the old mortgage is paid off and the charge is removed from the title. The key difference is that a sale involvestransferring ownership, managing a chain, exchanging contracts, and distributing proceeds to multiple parties. For a full breakdown of the costs involved, see our guide to conveyancing costs for sellers.
How Pine helps you prepare
The mortgage redemption process runs more smoothly when the rest of your conveyancing is well organised. Delays in providing property information, missing documents, and slow responses to enquiries can push back your completion date -- and every extra day adds daily interest to your mortgage redemption figure.
Pine helps sellers get their legal paperwork in order before they even find a buyer. By completing your TA6 and TA10 forms with guided AI support, ordering property searches at near-trade prices, and building a solicitor-ready legal pack early, you reduce the risk of last-minute complications. A well-prepared seller is more likely to complete on time, which means the redemption figure your solicitor obtained remains accurate and there are no costly surprises.
Sources and further reading
- Solicitors Regulation Authority (SRA) -- Guidance on undertakings and professional obligations in property transactions (sra.org.uk)
- The Law Society -- Conveyancing protocol and guidance on mortgage redemption during sales (lawsociety.org.uk)
- Financial Conduct Authority (FCA) -- Consumer guidance on mortgages, porting, and early repayment charges (fca.org.uk)
- HM Land Registry -- Guidance on discharging mortgages and removing legal charges from the title register (gov.uk)
- Citizens Advice -- Help with mortgage debt and negative equity (citizensadvice.org.uk)
- StepChange Debt Charity -- Free debt advice including guidance on selling a property with mortgage difficulties (stepchange.org)
- HomeOwners Alliance -- Consumer guidance on selling with a mortgage and understanding redemption costs (hoa.org.uk)
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Frequently asked questions
What happens to my mortgage when I sell my house?
Your mortgage does not simply disappear when you sell. Your solicitor obtains a redemption statement from your lender showing the exact amount needed to clear the debt, including daily interest up to the completion date. On completion day, your solicitor uses the sale proceeds to pay off the mortgage in full before transferring the remaining balance to your bank account. The lender then releases its legal charge over the property, allowing ownership to transfer cleanly to the buyer.
How long does it take to get a mortgage redemption statement?
Most lenders provide a redemption statement within five to ten working days of receiving the request. Some high street lenders offer online portals where your solicitor can obtain the figure more quickly. Your solicitor will usually request the redemption statement after exchange of contracts, timing it so the figure is valid for the planned completion date. If completion is delayed, your solicitor may need to request an updated statement because the daily interest element changes the total owed.
Do I have to pay an early repayment charge if I sell my house?
You only pay an early repayment charge (ERC) if you are still within a fixed-rate, tracker, or discounted-rate deal period. Once that initial deal period ends and you move to your lender's standard variable rate, there is usually no ERC. The charge typically ranges from 1% to 5% of the outstanding mortgage balance and decreases each year of the deal. Check your mortgage offer document or contact your lender directly to confirm whether an ERC applies and how much it would be.
Can I port my mortgage to a new property instead of redeeming it?
Many mortgage products include a porting option that allows you to transfer your existing deal to a new property, avoiding early repayment charges. However, porting is not guaranteed. Your lender will reassess your affordability and the new property's suitability, and you must apply as if taking out a new mortgage. The sale and purchase usually need to complete on the same day. If the new property costs more, you may need to borrow additional funds at a different rate alongside your ported deal.
What is the difference between remortgage conveyancing and sale conveyancing?
Remortgage conveyancing involves switching your mortgage to a new lender while keeping the same property. There is no buyer, no estate agent, and no physical move. Sale conveyancing involves transferring ownership of the property to a buyer, redeeming your mortgage from the proceeds, and distributing the funds. Sale conveyancing is more complex because it involves two parties, a chain, property searches, and a contract exchange. The solicitor's work on the mortgage element is similar in both cases, but a sale has many additional steps.
What happens if I am in negative equity and want to sell?
If your property is worth less than the outstanding mortgage, you cannot sell without your lender's agreement because the sale proceeds will not cover the debt. You would need to apply for your lender's consent to sell at a shortfall, sometimes called a short sale. The lender may agree if you arrange to repay the difference through a personal loan or payment plan. Some lenders allow you to transfer the shortfall to a new mortgage product. Without lender consent, you cannot complete the sale because your solicitor cannot obtain a clear title for the buyer.
Can I sell my house if I have a second mortgage or secured loan?
Yes, but every secured charge on the property must be cleared on completion. Your solicitor will obtain redemption statements from each lender and ensure all charges are paid from the sale proceeds in the correct priority order. The first mortgage lender is paid first, then any second charge lender. If the sale proceeds are not enough to cover all charges, you will need to make up the shortfall from your own funds or negotiate with your lenders before completion can go ahead.
How is daily interest calculated on my mortgage redemption?
Lenders calculate daily interest by dividing the annual interest amount by 365 (or 366 in a leap year). For example, if your outstanding balance is £180,000 and your annual interest rate is 4.5%, the annual interest is £8,100 and the daily interest is roughly £22.19. Each day that completion is delayed adds that amount to the total you owe. This is why the redemption statement includes a daily rate so your solicitor can adjust the figure if the completion date changes by even one day.
Who pays the mortgage redemption fee when selling?
The seller pays all mortgage redemption costs. These include the outstanding capital balance, accrued daily interest, any early repayment charge, and the lender's administration or deeds release fee (typically £50 to £300). Your solicitor deducts these amounts from the sale proceeds on completion day and sends the payment directly to your lender via CHAPS bank transfer. You do not need to pay these costs separately or in advance because they come out of the money the buyer sends on completion.
What undertaking does my solicitor give to the mortgage lender?
Your solicitor gives a formal legal undertaking to your mortgage lender promising to use the sale proceeds to redeem the mortgage on completion day. This undertaking is legally binding and regulated by the Solicitors Regulation Authority. It means the lender can trust that its debt will be repaid without needing to attend completion itself. If a solicitor fails to honour an undertaking, they face serious professional disciplinary action, which is why lenders rely on this system to release their charge over the property.
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