Your decision to purchase a new house is a significant life event, and the thought of becoming a homeowner in the UK might be a little intimidating.
However, homeownership brings with it several advantages, including the freedom to design your home as you wish, the capacity to keep a pet without needing the approval of a landlord, and most importantly, the ability to climb the property ladder and experience other benefits of homeownership.
Here, we’re diving deep into the top 5 advantages of homeownership to help you commit to your choice to invest in a home purchase.
Missing rent payments always comes with some level of shame, plenty of stress and the real threat of eviction. With home ownership, all you need to do is keep up with your mortgage payments.
You also enjoy the security of knowing you’re spending on a place that’s your own, not someone else’s.
Unlike a tenancy that comes with several restrictions, you can design and decorate your home as you see fit. You can renovate your place to meet your needs, turn it into a smart home or a more energy-efficient one, and so on.
Making a decision to keep a pet is all up to you, too. And as long as you follow local guidelines, you can do pretty much anything to your home.
3. Savings and equity
Paying rent is like putting money in a piggy bank you don’t own. Sure, it ensures you have a roof over your head for the time being, but the house you’re renting will never become your property. You can also save more when you’re fortunate enough to get a home loan when interest rates are low or a good deal on a fixed-rate mortgage.
Meanwhile, you also build equity when you work toward homeownership. The entire property will be yours once you’re done paying off the mortgage, so if you sell your house, you’ll receive the entire profit.
4. Tax advantages
Someday, you might find yourself selling your old home to invest in a new one. If you time your sale right, you can make a tidy profit on the deal and use it to purchase your dream home. You do not pay Capital Gains Tax when you sell (or ‘dispose of’) your home if all of the following apply:
- you’ve lived in it as your main home for all the time you’ve owned it
- you have not let part of it out or used part of it for business only
- the grounds, including the buildings, are smaller than 5,000 square metres (just over an acre)
This is because you automatically get a tax relief called Private Residence Relief. You do not need to do anything.
If you do not meet all these criteria you may have to pay some Capital Gains Tax.
5. Family legacy
When you have a family home, you’ll have something to not only live off during your retirement. You also have the option to leave it as part of your children’s future inheritance. In a way, you’ll also be helping secure their future. Also, you can always sell your home if you wish to downsize during retirement.
Owning a home comes with many advantages, and the ones listed here are just the beginning.
Thinking of getting a mortgage?
Make sure you do your research and discuss your plans with your financial advisor.
If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.