Can Mortgage Prisoners Still Sell Their House?

It’s a situation no one asks to be in, but thousands of people across the UK are stuck. They’re paying way over the odds on their mortgage, locked into deals they can’t change, with lenders they can’t leave. They’re known as mortgage prisoners.

And for many, the big question is: can I still sell my house?

If that’s you, this guide’s for you. We’ll walk through what it means to be a mortgage prisoner, how it affects your ability to sell and the options available if you need to get out fast.

What is a mortgage prisoner?

A mortgage prisoner is someone who’s trapped in a mortgage they can’t switch. It usually means they’re stuck on a high interest rate and unable to move to a better deal. This can happen even if they’ve kept up with all their payments.

Mortgage prisoners are often people who:

• Took out their mortgage before the 2008 financial crash
• Borrowed through now-defunct lenders
• Have since failed affordability checks that weren’t in place when they took out the loan

It’s a frustrating and deeply unfair situation. In 2023, the Financial Conduct Authority (FCA) estimated that around 47,000 people were still classed as mortgage prisoners in the UK.

Why can’t mortgage prisoners just remortgage?

The issue isn’t missed payments or poor credit, in many cases. It’s that the rules changed.

Before the crash, many lenders offered high loan-to-value mortgages with loose affordability checks. After 2008, stricter rules came in. That meant when people tried to remortgage, they no longer met the new criteria, even though they’d been paying the original mortgage just fine.

On top of that, many of these mortgages were sold to inactive or unregulated lenders, which makes switching harder.

Can mortgage prisoners sell their home?

Yes, in most cases, mortgage prisoners can still sell their home, but there are some hurdles to be aware of.

When you sell a property with a mortgage, the balance of the mortgage is repaid in full from the sale proceeds. As long as your sale price covers the outstanding amount, you can sell.

But if you’re in negative equity (meaning your home is worth less than what you owe), things get complicated. You’d need to make up the difference or negotiate with your lender, which isn’t always easy.

If you’re not in negative equity and want to sell, the process is similar to any other home sale. You’re not blocked from selling just because you’re a mortgage prisoner, but the urgency to escape high-interest payments often adds pressure.

What if your lender’s not regulated?

This is where things can feel murky. Some mortgage prisoners are tied to firms that aren’t regulated by the FCA. These firms don’t offer new loans, and they don’t have to follow the same standards as regulated banks.

While they can’t stop you from selling, communication may be slower or more complex. You’ll still need to request a redemption statement and follow the usual process for paying off the loan.

It’s worth knowing your rights. You can contact Citizens Advice or StepChange if you’re unsure where you stand. MoneyHelper also has a help page.

Why would a mortgage prisoner want to sell?

There are plenty of reasons. For most, it’s about ending the financial stress and moving towards something more manageable.

Selling could help if:

• Your monthly repayments are becoming unaffordable
• You’ve got equity in your home and want to downsize or rent
• You’re going through life changes (divorce, redundancy or illness)

For some, it’s the only way to get out of a financial bind. Especially as interest rates rise, being locked into a high rate when others are paying less feels unbearable.

How much equity do you need to sell?

There’s no fixed rule, but you’ll need enough equity to pay off your mortgage and cover the costs of selling. That includes:

• Estate agent fees
• Legal fees
• Removal costs (if applicable)

It’s worth speaking to a mortgage broker or financial adviser to understand exactly how much you owe, and what you might walk away with after a sale.

What if you’re in negative equity?

Negative equity is when your mortgage is bigger than your home’s value. It’s more common if you bought during a house price peak and haven’t built up much equity since.

Selling in negative equity is possible, but tricky. You’ll need your lender’s permission to sell for less than you owe, and you’ll usually need to agree how you’ll repay the shortfall.

Lenders aren’t obliged to agree, but some will work with you, especially if you’re struggling with payments. They may accept a repayment plan or a lump sum offer.

StepChange has more advice on selling your home with negative equity.

Are there any schemes or help for mortgage prisoners?

In recent years, there have been calls for government action, and a few steps have been taken.

The FCA changed rules in 2019 to make it easier for mortgage prisoners to switch, but uptake has been limited. Some lenders now offer modified affordability checks for eligible borrowers, but the deals aren’t always competitive.

There’s no dedicated financial support scheme for selling, but you can:

• Contact your MP to raise your case
• Check the FCA’s mortgage prisoner guidance
• Get advice from StepChange or Citizens Advice

Some campaign groups, like the UK Mortgage Prisoners group, are also pushing for more support.

How long does it take to sell?

That depends on the route you take.

• On the open market, selling can take several months
• Through an estate agent, it depends on demand in your area
• Through a cash house buyer, it can be just a matter of days

If time’s tight or you need to act fast to avoid further interest payments, a quicker route may be best. But always check for hidden fees and get independent advice.

What if I’m struggling to sell?

Some mortgage prisoners try to sell but can’t get the price they need. If you’re in this position, don’t panic.

Options include:

• Dropping the asking price
• Renting out the property (if allowed by your lender)
• Speaking to your lender about hardship options

If none of those work, a cash house buyer is worth considering. For many, it offers a way out of a bad mortgage and into a more manageable situation.

A lifeline for mortgage prisoners

Mortgage prisoners have been let down by lenders, by regulators and by a system that changed the rules halfway through the game. But you do have options.

At Sell House Fast, we help people move on quickly, with no agents, no viewings and no delays, just a personal service that works around you.

We’ve worked with homeowners in tough spots all across the UK, from people facing repossession to those trying to escape high-interest traps. We know how to get things done fast, without the usual faff.

We offer:

• A personal, human service (no call centres, we’re an experienced team who wants to help you)
• A simple, transparent process with no hidden costs
• Fast completions, often in a matter of days or to suit your timeline
• UK-wide coverage. We buy any house, bungalow or flat.
• Expertise in buying homes with legal or structural complications

So if you’re a mortgage prisoner and want to explore your options, we’re here to help. There’s no pressure, no hidden costs and no obligation. Just a straight answer, from a team who gets it. Why not get a free cash offer today?