Using equity in your home to build a property portfolio

I am often asked if using the equity from your home is a good idea if you are looking to build a property portfolio. Usually my answer is YES - but of course it does depend on circumstance and what you do with the money you release.

The key thing to remember is that the money you release is not going into a black hole - it is being invested in assets that you can always sell to get the money back. Hopefully it will generate you significant returns!

Rather than me ramble on - let me show you what one of our clients has done with our help.

CASE STUDY

This portfolio build was a classic case of starting small and then getting a bit more adventurous - but ultimately ends with the client building a decent sized and value portfolio. He was able to do it quickly, he is generating a healthy profit and it is easily paying for the cost of the equity released from his home.

For each purchase the client used a deposit from the equity released from his home, and we arranged a standard buy to let mortgage to fund the balance of purchase price (on an interest only basis)

Key takeaways

• The equity released hasn't really gone anywhere - it is safely deposited in the assets purchased and can be released back by selling those assets
• The client is generating over ￡1,364 profit per month. Even after tax that is a terrific return on the capital deployed
• Owning three properties reduces risk of factors such as rental voids as they can cover each other
• The client owns almost half a million pounds worth of an asset class that has a proven record of rising in value substantially over time

Should you do it?

It does depend on circumstance but you should of course speak to a specialist broker (like myself!) and of course do your research and educate yourself on property investment.

Beware of 'chicken littles' those who have no idea what you plan to do, how you plan to do it or the benefits but tell you you shouldn't do it. Always ask yourself if the person giving the advice has any experience or knowledge in the subject!

I am always here for a friendly chat and to give you some guidance

07740 284270

[email protected]