Why would your release equity from your home to buy another House?
There are two reasons for wanting to release equity from your residential home to buy another property. This could either be to provide additional income through a buy to let property or finally purchasing the holiday home you have always dreamed of.
Advantages to releasing equity to start a buy to let portfolio explained
Buying a buy to let property has always been on many people’s agendas as bricks and mortar have always been a safe investment that stands the test of time. Although with recent drops in the property market this option is still seen a safe route to providing a monthly income.
Entering the buy to let market using equity from your main residence is not a choice that should be taken lightly and we recommend the following steps to ensure that you are making the right desecion for you and your family.
3 things to consider before releasing equity from your home to buy a buy to let property
1 Understand The Value Of your Home
Investing in buy to let is all about risk versus reward. Understanding your property value and the amount of equity you can release to use for your investment property is crucial. This will give you an indication of what you can purchase and then potential rentals that could be gained monthly. Is this rental value going to make an intrinsic value to your financial future when you consider the work that is involved in managing a buy to let property?
2 Know Your Area
Location Location Location is a saying coined by many when it comes to property and could not be truer when looking into the buy to let market. Understanding your target area is key there are pros and cons for buying in your local area, it becomes easier to manage as you are close by. The cions could be rental yield and potential tenants. Consider your target area carefully we have many clients who will only purchase buy to let properties in areas with large employment and high turn around EG hospitals universities s and factories. other investors are looking for a more stable long-term tenant and want to attract young family and will target suburban areas close to schools and good amenities.
3 Speak to the experts
Understanding your property areas and the type of interest that is currently is key. Speak to estate agents in the local area they are normally more than happy to part with their wisdom to a potential client. After speaking to estate agents try reaching out to local landlords there is no better way to gain in depth experience than speaking to someone who has been through it.
3 Things to Consider When Purchasing a Holiday Home After Releasing Equity In your Home
1 Resale Value of Your New Property
When making a purchase of your holiday home using your equity from your main residence can be an extremely emotional process. Making an emotional purchase in property can be a huge pitfall especially when purchasing a holiday home here or in the UK. We always recommend considering the exit plan when purchasing a property as a second home as you get older is it passable that you will be visiting this property is it a lifetime plan or a ten-year plan considering this at the outset will provide you with a basis for your property purchase. Understanding the resale opportunity is key if your plan is to enjoy your new holiday home for a period before settling in a certain area.
2 Lifestyle Change
When releasing equity from your home to purchase a holiday home it is a huge lifestyle change. Many of our clients have tried renting properties in their desired location for a long period of time prior to making the plunge and releasing equity from your home. This ensures that your dream can become a reality and is workable in real life.
3 Ongoing Costs and Maintenance
Purchasing a holiday home must be considered carefully as the same costs are associated as running your residential property. Do you have enough disposable income to comfortably run your new home and enjoy the lifestyle you deserve. Our team of equity release consultants can work with you to ensure you release enough money to do this and advise you on potential costs and pitfalls.
Once these areas have been considered it is crucial that you seek an experienced equity release consultant who can help you in the way that you need. Providing impartial equity release advise at Primary Financial Solutions we work with you so that you understand all the pros and cons of equity release and how this will affect you individually and your loved ones in the future.
Contact us today to arrange a free equity release consultation call us on 01489 876 574. We will be more than happy to help you release equity from your home to buy a second home if it is the right thing for you to do.