Can I Sell My House if I Have a Secured Loan on it?

Many people who are considering taking out a secured loan ask the question, Can I sell my house if I have a secured loan on it? The basic answer to this question is, yes you can. However, there are a few important factors that you need to keep in mind which we cover in this article.

If you wish to sell your home to move to another home the process may be quite simple. The most common option is to get a remortgage to pay off your existing mortgage and secured loan, and cover the cost of your new home. However, you will need to check that you can borrow enough to pay off your two existing loans and buy your new home after you have sold your original home. If you have equity on your existing home and are in a sound financial situation this should not be a problem.

Another scenario is when you want to sell your home, but do not want to move to a new home. Since most secured loans limit you to borrowing 100% of your home's value less the amount owed on your mortgage this should not be a problem. However, there could be a problem if you borrowed more than this as the value of your home may be less than the combined amount owed on your mortgage and secured loan.

One situation that could cause you problems if you are selling your home is if the value of your home has dropped since you took out the secured loan. Again, this could mean that the value of your home may be less than the combined amount owed on your mortgage and secured loan. This would leave you with no home and a debt still to pay off. However, the recent property boom in the UK means that most homeowners have significant equity built up on their homes. Most people selling their homes now should be able to pay off their mortgage and secured loans, and still have money to spare. However, house price inflation is falling so be sure to be aware of the potential pitfalls if you are currently considering a secured loan.

Another factor to be aware of is that you may be liable to pay redemption fees for paying off your mortgage and secured loan early, whether you are moving home or selling outright. These are almost always levied on fixed interest rate loans and can be quite steep. So they need to be factored into the equation if you are selling your home.

You can always talk to secured loan lenders, they have experts that can advise and if appropriate help you get a loan.