Sometimes you can’t put a price on owning your own home and the feeling of security that it can bring, but if you did, it would probably be a higher figure than the one you paid for your property, if historical trends are anything to go by.
Searching for properties on a site like Bridgfords, soon reveals that there is a wide range of homes available that cater for all tastes and budgets, and these houses can look even more appealing when you consider the long-term investment potential.
The Chance to Build Wealth
Buying your home not only feels like you are enjoying some stability by putting down roots, but it also opens up the opportunity to build your personal wealth over a period of time.
There have been periods of uncertainty and turbulence in the housing market that has had an effect on values in the short term, but when it comes to investing in bricks and mortar, it often pays to take a longer term view rather than be influenced by moments in time where confidence in homeownership takes a knock.
The Simple Equation of Building Equity
Timing can definitely make a difference when it comes to property investing.
If you buy when the market is a potentially overheating and prices are rising too quickly to be sustainable, there is a chance that you might take longer to build equity and you might even experience a drop in values.
If you buy when confidence is low, you might of course be able to bag a bargain and grow your property wealth at a quicker rate when prices start to rise again. The point to take on board is that over a sustained period of time, it is not unreasonable to expect, if historical trends are a good guide, that the value of your home will exceed what you originally paid for it.
Every month that you make a mortgage payment, you are reducing the amount of money you owe, and subsequently, creating the opportunity to build your equity, slowly but surely.
Borrowing money to buy your home does come at a cost, and you have to pay interest on the balance that you owe on your mortgage each month.
This can make it seem in the short term that renting might even be a cheaper option than buying, but as the interest portion of your mortgage decreases over time due to the regular payments you are making, the balance will normally swing in favor of homeownership as a more cost-effective way of living.
Greater Level of Certainty
One of the fundamental problems with renting, is the level of uncertainty that you have from one month to the next, as you never know when your landlord might decide that they want their house back.
Owning your own home means that no landlord can send you an eviction notice, so as long as you continue to pay your mortgage on time, you can stay in your home for as long as you want to.
This can be a great source of comfort to some people, especially in later life, when you come to retire and have somewhere to live that is not going to cost you any rent, or mortgage payments, if you have paid off the loan and own your home outright.
Boost Your Savings
There are plenty of us who find it hard to put away money into savings each month, as living costs tend to have a habit of eating into our monthly salary.
Although it would probably not be the best strategy to rely on your property rising in value as your only savings to depend upon in retirement, the effect of owning your own home and paying for it over time, does mean that you are potentially boosting your savings without even trying.
It is also worth pointing out that buying your home and living in it as your primary residence, will allow you to get a capital gains exclusion.
This means that the profits you make up to $250,000 as a single owner or $500,000 as a married couple, will not be taxed. These tax benefits should not be underestimated and offer another great incentive to become a homeowner rather than renting.
When it comes to property investing, sentiment can change in the short term, but if you are looking for a long term bet that should pay off, consider buying your own home.
Emma Harris is a keen writer and blogger who has a background working in real estate. She enjoys sharing her knowledge on the subjects of housing and finance to help others climb the property ladder.