Here are some of the benefits of purchasing property when compared to renting.
It's Yours.
You own a tangible asset which adds diversification to your portfolio. An investment property will also add income and should pay for itself!
Personal Tastes.
You are free to make changes and decorate the house according to your tastes. If you rent, you will be limited in making alterations and decorations.
Avoid Paying Rent in Retirement .
Buying a house can be seen as an investment for your retirement. If you are able to buy in your 20s and 30s, on a standard mortgage, you will have paid off the debt by the time you retire. Not having to pay rent is a significant financial saving. Buying a house is in some regards like saving for a pension. You are not getting money but you are saving potentially very high rental payments in the future.
Capital Gains.
The value of your house is likely to increase over the long term. In the post-war period the value of housing has increased by more than the rate of inflation. It has also been a better investment than the stock market. There is no guarantee this will occur in the future. However, in the long term, the housing market is generally seen as a good potential for equity gains.
Secure Loans
The value of your house can be used to take out secure loans. If you are short of cash, owning a house gives you a greater range of loans to take out. Usually, these loans have a better rate of interest because they are less risky. Many homeowners often take the opportunity to re-mortgage and withdraw equity from the value of their house. Again this is more financially attractive than taking out other loans.
Mortgage Payments will decrease as % of Income. Mortgage interest payments will reduce in value over the course of time, renting will increase with inflation. True mortgage payments will alter with changes in the base rate, but assuming interest rates remain constant then mortgage payments will remain the same, they will not rise with inflation. In the latter part of your mortgage term, your mortgage payments will account for a smaller % of your income. However, if you rent, you’re rentable payments will most likely increase with inflation, and possibly more than the rate of inflation.
Low-Interest Rates. Although interest payments depend upon changes in the base rate, many economists feel that the UK economy is entering a period of low-interest rates. This is based on the fact that the economic cycle has become less volatile. Inflation has remained close to the governments' target of CPI 2% +/-1 This enables interest rates to remain low, making getting a mortgage more attractive.
Rent A Room. If you have a spare room in your house you can rent it out for extra rentable income.
Holborn Property
Contact me to find out about Holborn's one stop property service, with deposits from as little as 10% and guaranteed rental returns.
For more information, please contact me. I will be happy to help with whatever questions you may have.
Rob
E: robert.gourlay@holbornasstes.com T: +6 011-51565649 W: www.rgwealthsolutions.com
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