Your property represents years of financial and personal investment, making it one of, if not the most valuable asset you own. But how can you make your most valuable asset work for you? Here are some key methods for using your property as a source of additional income – whether to save more and afford some big-ticket items, or supplement a comfortable retirement.
Letting Out Your Property
One of the most popular ways to generate additional income from your property is by becoming a landlord and letting it out to new tenants. This is especially profitable for properties you no longer pay a mortgage on, as none of the rent you are paid is garnished – past the tax you owe.
Even if you only own one property, you can stand to profit from letting it out. You could let out a room, or seek out a lodger – a low-effort way to bring in additional income from spare space. You could even move out to a cheaper rental property yourself; as long as you ensure your outgoings on rent and overheads are lower than your rental income, you can make a profit simply by living elsewhere and renting out your home.
Equity Release
Usually, any investments you make in your property are locked up within it until you design to sell it. However, if you are over the age of 55, there may be a way for you to extract the value of your property in advance, without selling it – by using an equity release mortgage to access funds stored in your home’s equity.
An equity release mortgage is effectively an advance on a portion of your home’s equity, to be repaid on the home’s sale when you eventually enter long-term care. Lifetime mortgages are the most common kind of equity release, and see the tax-free release of money with no requirement for monthly repayments – though paying the interest can ensure that costs do not balloon in later life.
Property Development
If you have the time and energy, you could turn your property into an investment opportunity for yourself by indulging in property development – otherwise known as house-flipping. Some make their living from property development, by perennially moving into, renovating, and selling homes for profit. Professional property developers may do this via significant investment in multiple locations, but it is also a viable way to create a personal windfall. As such, you could treat your home in the same fashion as a professional property developer, by investing in renovation work and endeavoring to sell it at a newly increased value. With the housing market has experienced a more-than-10% increase in property value in 2021 alone and continuing to experience a record rise, there may not be a better time to capitalise
