AD| Real estate can be one of the most profitable businesses to get into. Even if you're buying a home for the long term and are just curious about how much of a return you can eventually get, there are things everyone can do to increase their equity.
Make A Large Down Payment
The larger your down payment, the more equity you have in your home. Instead of making the minimum down payment, plan on paying off a significant portion earlier so that your monthly payments may be lower or your mortgage can be shorter. Every cent you put into your down payment turns into equity, so don't be shy about pouring a lot of money into it.
The larger your down payment, the more equity you have in your home. Instead of making the minimum down payment, plan on paying off a significant portion earlier so that your monthly payments may be lower or your mortgage can be shorter. Every cent you put into your down payment turns into equity, so don't be shy about pouring a lot of money into it.
Increase Property Value
The simplest way to gain equity without paying off your home faster is to update your home itself. If you add value to your home, all of that value will be equity. The updates that increase value the most are kitchens, master bathrooms, and master bedrooms. When people look at Vancouver homes for sale, they’re considering how much work they will have to put into a property. Having updated spaces that are functional and pretty from the get-go has a lot of value in it.
Pay Higher Than Due Every Month
Following along the lines of making a sizable down payment, you'll be in a better financial position if you pay higher than your monthly set payment. Not only does paying off the debt faster lower your interest total, but it also ensures you start gaining equity faster. Do the math on how much you owe, what percentage above your monthly payments you can currently afford, and how much time that shaves off of your mortgage.
Have Patience Beyond Five Years
If you’re making the minimal house payment, the first five years of it are more than likely just covering the interest. Although it can be annoying to think of, this is the territory that comes with buying a home with a loan. After those first five years, all money you put into your property can be considered equity and make your home your own.
Spend One Partner’s Entire Salary
This tip is only for couples who don't have kids or significant financial obligations outside of their home: or who make enough that they can afford to do this easily. Many couples will earmark one of the partners' incomes solely for house payments. If both people in the pair are making around $50,000 a year, this could mean the couple pays off a $200,000 home in just under five years after interest.
This plan does have its fall-backs since it means that half of the income is gone, but if a couple is capable of living frugally, it's possible. After taxes take around 20% of their income, the couple would have to survive off around $3,350, which isn't impossible in most cities! This option should be thoroughly discussed and only used by couples who know and trust each other financially.
Have you considered real estate? What other ways can you grow equity?
