#SaturdayShare — RELEASING EQUITY TO START INVESTING IN PROPERTY
Hi everyone, hope you’ve had a fantastic week. In this article, you will find useful information, tips and guidance around investing in property in the UK, and business. Here’s what I want to share this week:
Releasing Equity from your own home to start investing in Property!
In the graph below from the Land Registry you can see that since 1969 (51 years) house prices have risen on average at 8.5% per annum.
The 2008 crash can be seen as a small dip in the grand scheme also gives us information about what we can expect over the next 50 years. Clearly there are likely to be recessions every 10 years on average (great investment opportunities!), but property prices will always go up. The data clearly helps understand why investing in property is a great way to become financial secure, grow wealth and create a legacy for your family in the future.
One of the ways you can start investing in property, if you don’t have sufficient deposit funds, is to release equity from your existing residential property. By releasing equity, you can generate a lumpsum (tax-free!) by refinancing your existing property, and to generate deposits to start funding the growth of your property portfolio. Many experienced mortgage brokers can help with releasing finance.
It is important however that you take independent financial advice based on your circumstances to avoid any tax related complications at a later date. I have a great team of accountants, mortgage brokers, financial advisors and estate planners that can help with this form of advice.
You can re-mortgage/re-finance your own home if it has had Capital Growth (thanks to power of inflation) & Equity Growth (as a result of your monthly mortgage payments- your equity in the property will have increased over time) over time.
Additionally, if you own other properties other than your existing residence, you can re-mortgage the equity growth out of those existing properties if your portfolio has 2 things:
- Capital & Equity growth
- Ongoing or Increasing Rental demand
To re-mortgage/re-finance, the rents would have to be increased gradually such that the rent is sufficient to cover the larger mortgage payments, or lenders wouldn’t allow the re-finance to proceed. This is also why it is important to review the rents of your properties annually to ensure that the rent is in line with similar properties in the area.
To summarise, many investors who want to get onto building a portfolio seem to think traditionally and spend many years trying to build a deposit to buy a property. This process can be very slow and not very rewarding. To scale up your investments and portfolio, you need to think outside the box and what a traditional investor wouldn’t think of doing.
It’s important to have a team around you that can accelerate and help you grow your wealth in line with your long term goals.
I hope this has been an interesting read. Let me know your thoughts and comments below. If you have any questions, please feel free to contact me.
Have a phenomenal day and week ahead!
Thank you for reading.
Manit