Residual Mortgage Debt: What Is It and How to Handle It?
Selling your home can sometimes result in a residual mortgage debt. This occurs when the selling price of your property is lower than the outstanding mortgage balance. While this is less common today, it is essential to understand the risks and know how to manage such a situation.
What Is Residual Mortgage Debt?
A residual mortgage debt arises when you sell your home for less than the remaining balance on your mortgage. This can happen due to declining property values, overfinancing, or unexpected financial setbacks.
Options for Managing Residual Mortgage Debt
Incorporate the Residual Debt into a New Mortgage
If you are purchasing a new property, some banks allow you to include the residual debt in your new mortgage. This depends on your income and financial situation.National Mortgage Guarantee (NHG)
If your previous mortgage was covered by the NHG, your residual debt may be forgiven in certain cases, such as a forced sale due to unemployment or divorce.Residual Debt Financing Through Your Bank
Many banks offer special loans to finance residual debt, often with more favorable terms than standard loans.
Tips for Handling Residual Mortgage Debt
Create a Financial Overview
Map out your income, expenses, and debts to gain a clear picture of your financial situation.Use Savings
Consider using part of your savings to pay off the residual debt, which can reduce interest costs.Seek Support
Share your situation with friends or family; their support can help you manage the stress and make informed decisions.
Advice from KIJCK. makelaars
Are you considering selling your home and worried about potential residual debt? At KIJCK. makelaars, our NVM-registered agents are ready to guide you through the sales process for a fixed price. Contact us for more information and discover how we can assist you.
Managing residual mortgage debt requires careful planning and deliberate financial decisions. With the right approach, you can successfully navigate this challenge.