Selling before buying with mortgage.

nicholbb

Hi,
Probably a silly question.
1) Can I sell my house and keep paying my mortgage until I find another to buy? Seems like wouldn't be an issue as would have more cash than owed but worried the debt is secured against property which I wouldn't have (like HP).
2) Am I right in thinking, if I have cash value above mortgage in (lending) bank and it goes bust (unlikely), I would have mortgage written off and be protected for next £85k of savings?

Background if needed
I'm renovating my house and planned to sell and buy another in a chain like most do. I saw a few EAs for valuations and advice, one sent around a potential buyer who seems likely to offer (even though 4 weeks off finishing and not even on market) and I haven't even looked for another house yet.

There are penalties for early repayment of my mortgage and have a cheap, long fixed rate I want to keep deal.

Have place to stay so not an issue there.

Thanks

somethingcorporate

Some lenders used to allow a small gap but you'll be hard pressed nowadays as with no house the lender does not have any security if you default.

Use a broker and see what they suggest.

Armorica

Your bank's website will give details of the 85k FSCS coverage (it can be spread across brands in some cases).

The mortgage question could depend on a number of factors including whether your mortgage contract is with the same legal entity. A debt you owe to the bank isn't necessarily written off if you fail. In some cases, the mortgage book has been sold to another provider / or you owe funds to the insolvent estate.

kingstreet

When you sell the security property, the solicitor involved has to repay the existing mortgage to provide unencumbered title to the purchaser.

A mortgage would be an asset of the lender. IN the vent of the lender ceasing to trade, the mortgage book would be sold off to raise funds to repay creditors. Therefore, your mortgage would continue unaltered, but owned and run by another party.

nicholbb

Thank you for your help, really useful.