What is a mortgage shortfall? This is the term used to describe what happens when you sell your home and it doesn’t cover the cost of your mortgage. Unfortunately, this is more common than most people realize and if you’re not careful, it can lead you into a level of completely unmanageable debt. So, how do you end up in this situation and how can you avoid it completely?

Buying At The Wrong Price

You should always be careful when you are buying a property that you don’t end up making a purchase when the market is at the peak. This means that if house prices are soaring, it’s never going to be a good place to buy. Instead, you should wait until the market has settled. Otherwise, you’ll find that when it does come time to sell the market could be at a far lower point than the initial purchase and this means that you’ll lose out. 

In the wake of the coronavirus pandemic, there is a strong chance that housing prices are going to crash through the floor. As such, if you are thinking about making a purchase, now could be the perfect point to do so. 

Selling Too Early 

By the time you sell, you should ensure that you have already paid off a substantial amount of the mortgage. The only exception here will be if you are choosing to flip a property. Flipping a property, it’s important to sell as quickly as possible rather than keeping the home on. If you keep the home on, then you will always be building up the costs and that’s the last thing that you want. 

If you’re not flipping, then you need to make sure you spend at least a few years pushing down that mortgage. Of course, you can also reduce the mortgage by ensuring that you are able to save as much as possible for the deposit. When you do this, the mortgage becomes far less of a burden. 

Add Value

Or if you are looking for the best way to avoid the mortgage trap when it’s time to sell, then you need to make sure that you are adding value to the home. There are numerous ways that you can do this. However one of the best is to work on improving the curb appeal. You need to change the aesthetic of the property and ensure that it looks stylish as well as modern. A company like Decorative Concrete WA can be the perfect option here to guarantee that your home stands out. 

Of course, you also need to explore the changes to your property that will add the most to the value and thus deliver the greatest returns. For instance, you can explore kitchen renovations. Kitchen renovations completed the right way, will add as much as 25% onto the value of the property which will be ideal. You just need to make sure that quality design and build are part of your plans. 

We hope this helps you understand the best way to get the most from your home sale and avoid the worst situation imaginable.