How to make your equity in your home work for you

By Ellyn Peratikou

Most people were brought up to believe that one of the key objectives of adult life is to pay off your mortgage on your home. At least this way, you’ll have a roof over your head or something tangible to fall back on if you hit financial turbulence.

There is undoubtedly a sense of security that comes with having no mortgage on the house that you live in and it is a very sensible goal for retirement. However, the downside is that it means a significant amount of capital, and probably your net worth, is being used in a very unproductive manner. It’s not generating any income or revenue, earning zero interest and not working for you at all.

If you have owned your home for many years, then it’s highly likely that you’ve got a mortgage that either represents a very small percentage of the value of your property, or you have no mortgage at all. Releasing a percentage of the value of your property is the single biggest opportunity for many people to raise the finances to use on other more productive investments.

Now here comes the “but”. Nobody is suggesting that it’s a good idea to attempt to release as much equity as possible from your existing property to fund a more extravagant lifestyle. Nor should you put this money into other investments where there is either a medium or high degree of risk, or where you have little knowledge or experience.

However, if you’re taking money out to invest in property that will generate much more income than the cost of borrowing, then that is what is referred to as ‘good debt’ – debt that works to produce an income over and above the cost of borrowing.

One option is to reinvest this money in buy-to-let (BTL) property. This will not only give you an income for life but create a legacy to leave to your children.

If you take a standard BTL investment model where 75% of the BTL property is mortgaged, you have to find 25% for the deposit and some legal fees and then any refurbishment of the property that you do. Done properly, buy-to-let investment can be a very secure, low-risk investment and a great way to generate both income and capital growth.

Releasing equity, if you have it, can be a great way of giving you financial options and choices that may otherwise not be open to you.

About the Author

Tony Bennett is a former business leader and inspirational marketing strategist. Having accompanied his wife to a Platinum Property Partners Discover Day in 2013, he was totally convinced by the property investment model and the people they met. He is now passionate about helping other people to invest in low-risk, profitable investments.

About Platinum Property Partners

Platinum Property Partners (PPP) is a successful property investment business that enables both novice and seasoned property investors to build a sustainable, profitable and life changing portfolio. Since being established in 2007 by entrepreneur Steve Bolton, PPP has shown phenomenal growth, effectively recruiting more than 200 partners who operate in 85 towns and cities across the UK.


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