Why Buy Property?
In most cases, there are only two reasons to buy properties,
- To live in-ie The family Home, OR
- As an investment
The Family Home
The majority of homeowners own only one property and live there. They have usually purchased this with a mortgage, which is what the banks call a long-term loan whose purpose is to purchase property. As this is usually the main, or Primary Mortgage, the interest rates are usually modest.
For most families, they purchase as first-time buyers and over the years progress to larger more expensive properties by selling their current property and paying off the amount owed, and then purchasing the next home with a new mortgage. This is called the property ladder.
Towards the end of a couples working life, after the kids have left the nest, they may sell off their home, and downsize to a property that suits their needs better, often a bungalow, which usually leaves them “Mortgage Free” for their retirement.
NB Things don’t always run to plan however, surprises happen.
Investment Properties.
Many people would rather invest in property rather than stocks and shares- in general they see good returns from rental income and over the longer term the capital usually rises steadily.
Many people have been able to own more homes than their Primary Dwelling. They may have inhered or re-mortgaged in order to raise money for a Secondary or Subsequent home. Or, they may have purchased the secondary home as an investment in order to either, upgrade and enhance it, or to rent it to another party, known as a tenant.
The banks view these Secondary and subsequent properties as investment mortgages or Buy To Let mortgages. These types of mortgages tend to have higher interest rates and require a larger deposit from the purchaser to reduce the risk to the bank.
If you are considering buying houses for whatever reason, please contact Hopper and Co. if you want some advice regarding areas, rental yields, Buy to Let Portfolios or just in general.
We are happy to take time for potential buyers and investors. If you require mortgage advice, we are happy to provide the details of Independent Advisors that we know and trust.