Why an asset?
Owning a home is often many peoples lifelong dream, as well as being their largest investment. It may be argued that property is an asset. However, when it comes to home ownership it is important to keep in mind the bigger picture, which will take shape over time. Owning a property outright (with no mortgage remaining) presents a world of opportunities for many people.
So, why an asset?
Often it is the intention of many families, to pass on their homes to their children. This is the prime example of how owning your home can be viewed as an asset. Inheriting a property can change lives. If re-sold, it can present you with a large sum of money that you may never have been lucky enough to come across otherwise. Also, if the decision were to keep that inherited home within the family, this may offer children, or even grandchildren, the security of home ownership without ever having to worry about committing to a hefty mortgage for many years.
Money making opportunities of this asset
When you are a homeowner, there are many things you can do to raise some extra money. For example, you may be able to apply for additional borrowing to raise funds for home improvements. Home improvements can often increase the value of your property, depending on what alterations you make. These can include things such as adding a conservatory or extension, having a new driveway, or even converting a loft space into another room. Increasing the value of your property can often mean a higher sale price if ever you do come to sell, meaning more money for you in the long run.
There are also the opportunities to make money without having to sell your property. You may be able to let your property out, whether this be just a single room, or the whole property, subject to you having somewhere else to live. Letting part of your property out, or converting it to a Buy to Let, enables you to earn rental income. This would be subject to following the correct procedures of your current mortgage lender. It is important to notify your lender if you intend to do this. There are also set guidelines to follow when becoming a landlord.
You may also like to start a business from home. For example, you may be able to convert a room in your home into a safe and adequate workspace, this can be for such things as beauty/muscle therapy, music lessons, whatever you set your mind to. Again, your mortgage lender would need to be made aware of this intention.
Why owning a home is a smart investment?
If you were to consider the costs of renting a property from a landlord, it is often the case that a mortgage payment on a similar property in the same area, is often cheaper than the rental payment. This is often the scenario, as that is how landlords make money. If they were to charge you the same amount as their mortgage payment, they would not cover other additional landlord costs.
It is wise to consider the reality of renting in this day and age, the money you are putting into paying rent every month, you are never going to get back. Whereas paying a monthly mortgage payment offers you the security of being a homeowner, as well as contributing to the end goal of owning that home and reducing the balance as time goes along. While saving a deposit for a mortgage is challenging for many, our Family Assist Mortgages or our Guide to Saving and Budgeting can help you make the first step.