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I'm a property expert that still remembers the days when having broadband was a selling point! My articles cover issues that homesellers face in the UK and answer the questions we're all asking. I've bought and sold properties and helped others do the same, so my writing comes from years of experience.
Read Full Bio >Get free debt advice before you sell. Selling clears the mortgage and any debt secured on the property, but unsecured debts remain unless you pay them, and a lender may agree to lower payments instead.
Key takeaways
- Selling is not a debt solution on its own. Sale proceeds clear the mortgage and anything secured on the property first. Credit cards, loans and overdrafts survive the sale unless there is enough equity left to pay them.
- Free, regulated advice comes first. StepChange, National Debtline and Citizens Advice are free, and only a regulated adviser can start the 60-day Breathing Space that freezes interest, charges and enforcement while you decide.
- Your lender has options short of a sale. Extending the term, a temporary interest-only period, capitalising arrears or a reduced payment arrangement are all standard forbearance measures the FCA expects lenders to consider.
- If you do sell, the open market usually nets more. On a £250,000 home with a £180,000 mortgage, an agent sale can leave roughly £28,000 more than a fast cash sale — provided you can wait five months and it does not fall through.
- Speed only earns its discount against a real deadline. A court date, mounting arrears interest or a charging order can cost more than the gap. Without one of those, waiting is worth money.
Should you sell your house if you are in financial difficulty?
Sometimes — but it is rarely the first answer, and it is worth being clear about what a sale actually achieves. Selling converts an illiquid asset into cash and stops the mortgage payment. It does not, by itself, deal with unsecured debt, and it removes an asset you cannot get back. For a lot of households the better route is a payment arrangement plus free debt advice, which costs nothing and keeps the home.
Where selling does make sense is when the mortgage itself is unaffordable long term rather than temporarily, when there is meaningful equity that would otherwise be eaten by arrears interest and legal costs, or when a court date is close enough that doing nothing means the decision gets made for you.
What should you do before you decide to sell?
Three things, in this order, and all of them are free.
- Speak to a free debt adviser. StepChange, National Debtline and Citizens Advice are free, independent and FCA-regulated. MoneyHelper is the government-backed service. Never pay a company for advice these organisations give away.
- Ask about Breathing Space. The Debt Respite Scheme gives most people a 60-day legal pause on interest, charges and enforcement while you get advice. Mortgage arrears can be included; the ongoing monthly mortgage payment cannot and must still be paid. Only a regulated adviser can start it.
- Ring your lender and ask what forbearance they offer. Extending the term, switching to interest-only for a period, capitalising the arrears or agreeing a temporary reduced payment are all normal. Lenders are expected to treat repossession as a last resort.
Also check your benefit entitlement. Support for Mortgage Interest (SMI) is a government loan covering interest on up to £200,000 of mortgage for people on certain benefits — see GOV.UK. If you are already claiming, our guide on selling a house and Universal Credit explains how sale proceeds affect a claim, because that catches people out.
What happens to your debts when you sell?
There is a strict order, and understanding it is the difference between a sale that solves the problem and one that does not.
- Secured debts are paid first, automatically. Your mortgage, any second charge or secured loan, and any charging order registered against the property come out of the proceeds on completion. Your solicitor handles this; you do not get the choice.
- Unsecured debts survive the sale. Credit cards, personal loans, overdrafts, catalogue and council tax debt are not cleared by selling. They are still owed the day after completion unless you use the remaining equity to pay them.
- An early repayment charge may apply. If you are inside a fixed-rate period, redeeming the mortgage early can cost 1% to 5% of the balance. Ask your lender for a redemption statement before you commit to anything.
- A shortfall does not disappear. If the sale does not cover the mortgage, the balance remains a debt you owe. This is why negative equity changes the answer completely and why advice matters before, not after.
Watch for charging orders. A creditor with a county court judgment can apply to secure that debt against your home. Once a charging order is registered it must be paid from the sale proceeds like a mortgage, which can turn a manageable unsecured debt into the thing that takes your equity. A debt adviser can tell you whether one has been registered and what can be done about it.
How much equity would you actually be left with?
This is the calculation worth doing before anything else, because it usually settles the question. Here it is on a £250,000 home with a £180,000 mortgage, comparing the two realistic routes.
| Line | Estate agent sale | Cash sale at 85% |
|---|---|---|
| Sale price | £250,000 | £212,500 |
| Agent commission (1.42% inc VAT) | −£3,550 | £0 |
| Legal fees | −£1,200 | £0 (buyer covers) |
| Carrying costs while selling | −£6,000 (5 months) | −£1,200 (1 month) |
| Mortgage redeemed | −£180,000 | −£180,000 |
| Left for you and your other debts | £59,250 | £31,300 |
| Time to completion | 22–28 weeks | 7–28 days |
The honest conclusion is that the open market wins on this example by roughly £28,000, and if you can wait five months you should. The fast route only earns its discount when waiting is not actually available: a possession hearing listed for next month, arrears growing faster than the gap, or a sale that has already fallen through once and cannot be relied on to complete a second time. Remember that 23.7% of agreed sales collapsed in the first quarter of 2026, so a five-month plan is not a guarantee either.
What are the alternatives to selling?
Several, and a debt adviser will go through them properly with your actual figures. In outline:
- Lender forbearance. A longer term, a temporary interest-only period, capitalised arrears or a reduced payment plan. Cheapest option by a distance and keeps the house.
- A debt management plan. An informal arrangement, usually set up free by StepChange or National Debtline, that reduces payments to unsecured creditors to what you can afford.
- Formal insolvency options. An individual voluntary arrangement or bankruptcy can write off unsecured debt, but both have significant consequences for a homeowner and can put equity in your home at risk. Take regulated advice before going near either.
- Downsizing rather than exiting. Selling and buying something smaller releases equity and cuts the monthly cost without leaving you renting.
- Renting the property out. Only viable with lender consent to let, and it makes you a landlord with all that involves — but it can cover the mortgage while you recover.
Springbok Properties is not a debt adviser and cannot tell you which of these is right for you. That is exactly what the free services above are for, and they have no interest in the outcome.
How quickly can you sell if you have decided you need to?
An open-market sale takes 22 to 28 weeks from listing to completion. A direct cash sale completes in 7 to 28 days, because there is no chain, no mortgage application and no marketing period. If you are in arrears, tell your lender in writing that a sale is under way — lenders will frequently hold off on proceedings while a credible sale progresses, and our guide to how many mortgage payments can be missed before repossession explains where in that process you stand.
If you do take the fast route, check the buyer properly first: NAPB membership and Property Ombudsman registration on the actual registers, proof of funds before you commit, and no upfront fees or lock-in clauses. Springbok Properties Ltd (company no. 09045757) is regulated by TPO and a member of the NAPB, charges no fees and covers the legal costs. The numbers behind the offer are set out in how much below market value cash buyers offer and cash buyer vs estate agent; the process is in selling a house in 7 days, how to sell your house fast and sell house fast.
Frequently asked questions about selling a house in financial difficulty
Does selling your house clear your debts?
Only the debts secured on it. The mortgage, any second charge and any charging order are paid from the proceeds automatically. Credit cards, loans and overdrafts remain owed after completion unless you use the remaining equity to settle them.
Should I sell my house to pay off debt?
Not before taking free advice from StepChange, National Debtline or Citizens Advice. Lender forbearance or a debt management plan often solves the problem without losing the home, and selling is irreversible. It makes most sense when the mortgage is unaffordable long term.
What is Breathing Space and can I use it?
Breathing Space is a 60-day legal pause on interest, charges and enforcement action, started for you by an FCA-regulated debt adviser rather than applied for directly. Mortgage arrears can be included, but ongoing monthly mortgage payments are not and must still be paid.
What happens if the sale does not cover the mortgage?
The shortfall remains a debt you owe to the lender. Selling in negative equity normally requires the lender’s consent and changes the whole calculation, so speak to a regulated debt adviser before marketing the property at all.
Is it better to sell quickly or wait for a full price?
Wait, unless you have a real deadline. On a £250,000 home an open-market sale can net roughly £28,000 more than a fast cash sale. Speed is worth paying for only when a court date, growing arrears or a collapsed chain makes waiting more expensive.
Written by Dan Green, Property Expert at Springbok Properties. Last updated 2 September 2026. This is general information, not debt, legal or financial advice, and the worked example is illustrative. If money is a worry, StepChange, National Debtline and Citizens Advice all help free of charge.
