Sell your house to clear mortgage arrears

Yes. You can sell your house at any point, even if you are behind on mortgage payments. You remain the legal owner until the lender completes the repossession process. Selling voluntarily while in arrears is usually the best option because you retain control of the process, typically achieve a better price than a forced sale at auction, and can prevent a repossession from appearing on your credit file. The arrears and outstanding mortgage balance are paid off from the sale proceeds.

If the sale price exceeds the total amount owed (mortgage balance plus arrears plus any early repayment charges), the arrears will be cleared and you will receive the remaining equity. If the sale price does not cover the full amount owed, you will need to discuss the shortfall with your lender. In many cases, lenders will agree to a repayment plan for the remaining amount or may accept a reduced settlement. Selling voluntarily almost always achieves a better outcome than waiting for repossession.

There is no fixed number, but most lenders begin the formal process after three to six months of missed payments. Before taking legal action, lenders must follow the pre-action protocol, which requires them to contact you about the arrears, consider reasonable proposals for repayment, and give you time to seek advice. The full process from first missed payment to bailiff eviction typically takes 9 to 18 months, but this varies by lender. Acting early gives you more options and time to arrange a voluntary sale.

With a cash buyer like HouseBought4Cash, you can complete a sale in as little as 7 to 14 days. This is often fast enough to clear your arrears before the lender progresses further with repossession proceedings. We instruct solicitors immediately and prioritise urgent completions where repossession is a risk. The key is to contact us as early as possible so the legal work can be completed before any court deadlines.

Yes. Lenders generally prefer a voluntary sale over repossession because it typically achieves a higher price, costs them less in legal fees, and resolves the situation faster. You do not need your lender's permission to sell, but you should inform them of your plans. If you are already in repossession proceedings, selling can still proceed up until the point when bailiffs take possession of the property. If facing financial difficulty, we recommend seeking advice from Citizens Advice or a debt charity such as StepChange.

The key is to act as early as possible. Contact a cash buyer like HouseBought4Cash who can provide an offer within 24 hours and complete in as little as 7 days. Inform your mortgage lender that a sale is being arranged and provide them with proof of the accepted offer. Most lenders will pause repossession proceedings when they see a genuine sale is progressing. The sale proceeds clear your mortgage balance and arrears directly at completion, and any remaining equity goes to you.

If the property has been your main residence throughout your ownership, Private Residence Relief means no Capital Gains Tax is payable on any gain. This applies whether you sell on the open market or to a cash buyer. The sale proceeds used to clear your mortgage and arrears are not treated as taxable income. If you have been renting the property out, different rules may apply. We recommend consulting a tax adviser for your specific circumstances.