What happens if your mortgage exceeds the house value?

If your mortgage exceeds the sale price of your property your will be subject to a "Mortgage Shortfall"

If you are selling your property to move to another and the shortfall is less the 2% most high street lenders can arrange a loan for your replayment of the mortgage shortfall and will not prevent you selling your property.

If the % of "Shortfall" is significant some lenders will insist in you taking a secured loan, or disallow the sale of your property until some of the shortfall is paid.

If you have mortgage shortfall, AND mortgage arrears it is unlikely any high street lender will allow you to sell the property and move to another. If your mortgage arrears exceed 3 months they may start repossession proceedings.

In most cases if individuals financial situation allows the most cost effective way of dealing with mortgage shortfall if you intend to move and do not have adverse credit is to find the cheapest unsecured loan for the minimun required by the lender to pay off a lump sum of the mortgage which will reduce or remove any shortfall your property currently has.