Your money and property

Your Money & Property: The Ultimate Guide for You

Posted on 15th August 2013

Property is one of the most exciting yet misunderstood types of investments that exist in personal finance. When you are thinking about how to build your personal finances, you need to consider how to create a firm financial future for yourself. Many investors choose property as one of the top ways to invest and protect their money. The Council of Mortgage Lenders found that first time buyers are at their highest level in the UK as of this month since 2007. Statistics like this show how the property market is changing where more people are entering the market. The Council of Mortgage Lenders stated over 68,000 people have purchased their first home in the second quarter of 2013 alone. With so many people opting to purchase their first homes, it puts it even more in the spotlight.

Types of property available

The UK is blessed with different types of properties that are available for purchase or rent.  Whether you love coach houses or flats, there are plenty of options that you can use to get onto the property ladder. Choose from rural and city options depending on what your lifestyle is like. Some people prefer terraced homes while others like city flats for their fast-paced lifestyle.

How property is used as an investment

In the UK, property is used as an investment vehicle through two mediums: buy to let and buying so you can sell it outright. The Council of Mortgage Lenders found that the UK’s buy to let market is now worth a staggering £5bn. With such a large amount like that, it’s clear that buy to let is one of the most popular ways of getting on the property ladder. The advantage of buy to let is that it allows you to get on the property ladder and start seeing dividends from the cash that you are receiving from your tenants.

In this regard, it’s a good way of making extra income every month because you know if you have a reliable tenant, you will get income every month. The only things to remember are that when you go for buy to let, you are liable to be a landlord for your tenants which means dealing with any problems that they have.

Experts see property as a good place to park your cash however, don’t fall into the trap of becoming a speculator. You should recognise that you will have to hold onto it for several years to see if its value will increase.

Understands how property works

You should absolutely research how to use your money to make the most out of the investment. Simply reading books from gurus is not enough – you should research the market and teach yourself. Decide whether you want to be a speculator, a developer or if you just want to have property in your portfolio. By learning from various sources, you will understand how it works.

Mortgages make buying property simple because the bank lends you the money to buy the one you want. You should always look at what banks look for when they green light a mortgage.

Property checklist to get a mortgage

  • Good credit history: Banks and building societies look for customers who know how credit works and can pay their mortgages on time. If you have a credit history that is solid, this makes you a good candidate.
  • Stable job: Just like how a lender for cash loans wants someone with a regular job, banks are looking for the same stability when they are checking someone’s mortgage application. Make sure that you have references from your employer so that the bank can see you have the means to pay for your mortgage.
  • Do your research: Choose the one that you can afford, not necessarily a shiny and flashy that could be more expensive for you.

Property & renting

If you are renting, this doesn’t mean that you can’t get on the property ladder. Renting gives you the opportunity to see what types of properties are popular with tenants and it also doesn’t tie you down to a specific property for a set amount of time. This is ideal for people who like to move around a lot and don’t want to stick to a mortgage for 20 years. When you are looking for somewhere to rent, always factor in an emergency fund of cash. This will help you in case you are paid late by your employer or in case you lose your job.

Ultimately, jumping into the world of property should only be done once you have done research and spoken to your financial adviser. It can be a rewarding investment however; it requires you to understand your personal finances. With this guide, you can understand how to make property work for you so that you can build a rock-solid financial future.

Author: narek.vardanyan

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