Buying your first home is a huge step towards adulthood. Yes, until you actually own your own home, you are playing with that line a little bit. But jokes aside, there is a reason why they say that your home is an asset. Technically speaking, this kind of property is projected to appreciate as time goes. Yes – even with the 2006-2007 type financial disasters, property prices eventually recover. So from a long-term perspective, the general trend of property prices is to move up. And as an asset, you can use your home as equity to get things done. How do you do that, you ask?
Wait for the prices to rise
This is the ‘laid-back’ approach to gaining more equity from your first home. If, say for example, you bought your home in 2009 when things were a little cheaper than they are now. If the house was worth £100,000 then and it is worth £130,000 now, in just 8 years, you have gained £30,000 worth of equity.
Assuming that the housing market keeps going your way even despite the currently prevailing Brexit issues, you will continue to gain more equity albeit slowly. This is one approach. There are, however, other, more proactive and aggressive ways to gain get more equity from your first home.
Make larger repayments
If in some way you have found methods through which you can make extra cash consistently, why not make larger mortgage repayments? That way, you can channel the extra monthly payments towards the principal. This will allow to pay off your loan much faster and grow your home equity quicker.
Get shorter mortgage terms
Another way to go would be to shorten your mortgage terms. Instead of sticking to the 30 year repayment plan you have now, you can refinance and get into a 15 year fixed term at a lower rate but higher repayments. This will help you build equity faster all the while helping you pay off that loan much sooner. Plus, with the refinancing, you could end up with a bit more money in your pocket. Win-win.
Make strategic home improvements
The best way to have a house that is worth much more without actually buying one that is worth much more is to make a few strategic home improvements. If you can find renovation projects that end being worth more than they cost to undertake, you will end up with a house that is worth much more when all is said and done. This increase the value of your property overall thus giving you more equity.
Do not refinance
Ultimately, you could decide to throw a stick of dynamite on all this and simply avoid refinancing. This way you will not be ‘taking any money out’ of your home while preserving your standing equity. With an increased or accelerated repayment plan, you will build up that equity faster.
Other options include improving your curb appeal and trying to put down a much bigger deposit when you buy. Whatever the case, you can gain more equity from your first home by being calculating and smart about the investments and decisions you make in regards to the property once you buy it.Tags: how to get more equity for your home, renovation projects to improve home value, why you should not refinance