How Owning Your Own Home Can Increase Your Wealth

As we get older and move into different stages of our lives, the idea of “wealth” begins to hold a little more weight than it did in past years. Striving to build a financial safety net keeps us showing up to work day after day, in an effort to build our financial stability.

For many people, it can take a lifetime to accumulate wealth. Many different fundamental aspects of life can lead us to build on savings and can even eventually lead to a comfortable level of wealth. Your home is one of those aspects and can help you to build on wealth in more ways than one.

Here’s how your home can contribute to your wealth.

Home Buying as a Safety Net

It’s a common question; to rent or to buy? Many people rent as they are not 100% sure they are ready to be locked down to a specific location or to a specific home.

In saying that, it is important to remember that when renting, you are paying off someone else’s mortgage. If you were to own your own home, you would be paying off your own mortgage and by doing so you are in the process of adding value to your own home.

It may take time, but your home will eventually appreciate in value and paying off a mortgage helps you to save money.

The process of paying off your mortgage forces you to build upon savings, which will also help you grow your equity. If you were to sell your home, there would be a chunk of money that appreciated from the initial investment you made to secure your home.

Buying your own home will be one of the biggest decisions you make within your lifetime. In saying that, owning your own home is also a conservative, long-term investment.

This has been seen through the decades as home values have increased by 3%-5% every year. According to the savings experts at Direct Appliance Rentals,“even as your home’s market value fluctuates, the price of your mortgage payment is concrete, meaning that your house value might increase, but your payments will not. This builds on home equity to increase your overall wealth”.

Property as a Smart Asset

Property is one of the least volatile assets that you can have and has historically been shown to increase in value over time. It has been such a valuable lifetime investment for generations due to the fact it is a steady and safe way to build wealth. Mark Bouris, Australian businessman and the founder of Wizard Home Loans, the second biggest non-bank mortgage lender in Australia, explains that the lowering of interest rates has lead Australian homeowners to having a 2-year mortgage payment buffer.

Bouris says “…that has come about as a result of lowering interest rates over a long period of time, and the retained low-interest rates where Australians have kept paying [off their mortgages at] their old schedule. As a result there is a lot of equity in the property that we own today”.

Bouris believes that this equity should be put into investments. Whether the investment be shares, renovations in existing real estate or even topping up your superannuation.

Ultimately it is smart to work towards building upon your equity and in turn building on your wealth.

Buying Vs Renting for Wealth

Building wealth through your home is a smart and reliable way to gain monetary stability. Not only this, but you also get to live in the home,  which means stability and financial security. The renting world can be ruthless with a growing number of homeowners wanting to renovate or simply move back into their own home.

This means that you are either in the position of quickly scrambling for an available house in the same area or find yourself having to move back with your parents. Constantly moving is costly and is in no way going to help you to build upon your wealth.

Gary Weiner, a Financial Advisor at Super Saving Tips, speaks on your home’s ability to appreciate. He says “If you brought a home in 1976 (average price $48,000) and you still own it today, its net worth would be about $385,000 and your home has appreciated over 800%. While also considering you have lived there for 40 years, had tax advantages and have earned $300,000 in equity from it”.

While your property will gain value just from the housing market, there are also ways to ensure that your property’s value will continue to increase. This includes:

  • Preventative maintenance: Keep on top of water, gas and heating systems in your home. It is so much more costly to burn these out and have to replace them.
  • Repaint both exterior and interior whenever necessary. Keeping paint fresh takes years off your home and ultimately adds to the value of your property, while also protecting the materials of your home.
  • Keep up to date with a small kitchen and bathroom renovations. These include replacing handles, fixing cupboards and making sure that everything is in constant working order.

If you are in a position to start assessing your wealth and ways in which to build upon it, look towards your home.

The home has been a solid wealth building asset for generations. To encourage wealth, Maxiron Capital experts suggest, “use your home’s equity and invest in real estate or shares to keep your financial stability rising.”

When considering to rent or buy, would you rather pay off someone else’s mortgage or your own?

Author Bio:

Joe Davies is a freelance writer and university student based in Sydney. A business administration student, Joe enjoys cinematography and going to the cinema. When not at his desk, you can find him critiquing his favourite shows.


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