Buying a property is a huge responsibility, and also a huge joy!
No more Mr. or Mrs./Miss Landlord, you are the owner of all you can survey….in your own property.
But again, with this joy and freedom, comes a big responsibility. If something needs to be repaired or you want to update some aspect of the property, no calling the landlord. It is your responsibility.
This is not being appreciative of something someone has done for you, this is you property appreciating in value; meaning it goes up in value.
Buying a property is an investment, and investments are made to make us money. Buying a property is no different. We buy a property to live in, have a family, grow, and also to make money.
Over time, properties become more valuable and grow in value, they appreciate. So a £150,000 property bought 10 years ago, may now be worth £175,000 or more!
As you pay down your mortgage, and the property appreciates, you gain what is termed equity.
Property value goes up + mortgage balance goes down = equity.
Repairs and Improvements
Now that you own your own home, and are responsible for all repairs, you also can consider updates and improvements. For many it is the kitchen and bathrooms that updates are needed over time.
There also is do we do a loft conversion, add a conservatory, ensuite???
For many home owners, adding to their property may be a simple decision, we want it and we do it. However, if you look at the home as an investment, you need to consider your return on that investment.
You need to weigh the cost of the improvement against what the return will be, meaning if you invest £5,000 in a new conservatory, or £10,000 in a loft conversion with bedrooms and toilets, will it pay off in the end if you sell the property.
If you are going to live there for years, and the improvements are just for you, then yes, it may be fine. However, if you plan to move in a few years, you need to look at the cost of the improvement against what you may be able to sell the property for.
Many a time someone has “over-improved” their property, and cannot sell it for what they need to get out of it as an investment.
You also need to look at the value of taking out a loan to make these improvements. Is the loan and the payments worth it?