Not ready to sell up just yet? Find out how else you can benefit from high property prices.
Not ready to sell up just yet? There are more ways that you can benefit from the high property prices right now. Read more to find out how.
It can be tempting to put your property on the market when property prices are high.
It's almost intriguing to see what price you could actually get.
To capitalise on the increase in your home's value and get a nice big payday.
But what if you don't really want to move?
Often, properties only come on the market for sale because the owner needs to sell.
Selling your home is an emotional decision, not a logical one.
So the decision to move is not made because property values have gone up.
Whilst it is one of the favourite topics of conversation in the UK, after the weather, the housing market doesn't impact you at all unless you are trying to sell.
Yes, you may be curious to see how much it's worth. But if you're only curious and have no plans to sell, then it doesn't matter whether the market is up or down. You could ignore the property market altogether if you wanted to.
But you might be able to use the increased housing market to your advantage, even if you are not thinking about selling.
So how can you use your rising property value to your advantage?
If the value of your home has increased, then your equity has grown with it. Think of this as your pot of gold - your nest egg.
It's cash that belongs to you because the value of your asset has increased. It's like a valuable antique dresser, a piece of jewellery or a beautiful work of art. The item owner knows that it's worth more money than when they bought it, but that increased value is only realised if they sell it.
With your home, that would mean moving out!
But, if you are not selling up and don't want to move, what, if anything can you do with that pot of gold you're sitting on???
Remortgage: If the value of your home has gone up, the likelihood is that your equity has too. This is the difference between the amount of any outstanding mortgages and the total property value. It may be possible to arrange for a new mortgage so that you can withdraw some of the difference. This money can then be used for a wide range of things - home improvements, paying off other debts, or maybe even a holiday or a new car. Of course, you will have to pay this money back through your mortgage - it's not 'free' money. But, you have the funds within your property.
Extensions: With all of that extra equity, you might decide that it's time to invest in your property and build an extension. You might not want to sell up and move house, but a little extra room might be nice. So, with your remortgage funds, it could be possible to investigate the options of building an extension to your existing home. Or maybe a loft conversion?
Home improvements: Perhaps not as dramatic as an extension, but maybe a new kitchen, bathroom, or redecoration is in order.
Investments: You may even be able to release enough funds to purchase your own investment property. This could generate a supplementary income or go towards your pension.
The key is to find a way to leverage the equity, or your pot of gold, without selling the asset. Usually, this would be a further loan, either with a second mortgage or an advance on your current mortgage, to release the equity.
Of course, some may not want to increase their borrowing against their property. In the UK, particularly among older generations, the message has always been to try to pay off your mortgage as quickly as possible. That's not going to happen if you keep increasing the borrowing.
But mortgage interest rates are still comparatively low compared to previous generations.
And because life expectancy and retirement ages have increased, the available mortgage terms have also increased.
If you're buying your first home in your early 20s, you would likely be able to take your mortgage out over 35 or maybe even 40 years! Much longer than the standard 25-year loans of previous generations.
So, although property prices are higher than ever, loan terms and rates are lower.
By increasing the borrowing on your mortgage to make home improvements, you're likely to increase the value further. This way, it's more like an additional investment into your property than an extra loan.
Suppose you took out equity and used it to buy an investment property. In that case, you're increasing your personal wealth and building an investment fund to go towards your retirement.
Releasing the equity from your home could increase your overall wealth - if you use it wisely!
If you're curious about the value of your home, why not give our instant online valuation option a try?
No need for an appointment or a visit to your home.
Then spend the rest of your evening thinking about what you might spend all of that lovely equity on.