Is Your Home an Asset or a Liability?

Many people wrongly believe that their home is an asset, but this couldn't be further from the truth and is an old school way of thinking that for many no longer serves them.

In reality a home is a liability, that costs us money every month, rather than make us money every month.

When you think about all the expenses that go with owning a house to live in personally. The mortgage payment for a start, followed by the energy costs, insurances and so on and so forth.

An asset is something that puts money in your pocket. A liability is something that takes money out of your pocket. - Robert Kiyosaki

But there is a way to turn your house into a cash flow producing asset that many savvy homeowners are turning to, especially in this current climate.

And that is of course equity release.

Now, many people are quite willing to choose this method of funding to purchase their investment properties as it is the cheapest form of borrowing out there, but they're waiting for the market to drop before taking the step forward, thinking there will be better deals to be had when it happens.

And all indications do point to a dip in the market in the near future, although it is extremely buoyant right now, the downturn is inevitable at this point.

But the way to look at it is, that if you had say ￡100,000 of equity in your home right now, then that's enough to go out and purchase up to three buy to let properties that could be cash flowing you up to ￡700 per month between them.

So, releasing ￡100,000 to generate over ￡8,000 per annum, as opposed to leaving it where it is and generating ￡0 per annum. Is the smart decision that many people are making right now.

Turning your home into a cash flowing asset

If you are waiting until the market slows down and prices drop before taking action, then this is going to have an effect on the amount of equity sitting in your home reducing the amount available to invest into cash flowing assets.

So, it's definitely something to think about for those considering the equity release option and whether they are willing to take the action now or risk missing out on the premium funding they are sitting on in the own home.

To find out more about investing in property and what your options are for getting started, contact me via LinkedIn or head over to our website tynesidepropertyinvestments.com, fill out the contact form and download your FREE guide to handsfree property investing.