A property or piece of real estate is the single most expensive asset that you’ll ever buy, especially with the average UK house price having soared by nearly £30,000 year-on-year to £260,230 in March 2023.
Not everyone buys a house for the same reason, however, as while some look to create a home, others want to leverage the property as a viable source of income.
But how can you successfully leverage your property as a source of income? Here are some ideas to keep in mind:
1. Letting Your Home
You may want to leverage your home through a so-called “buy-to-let” mortgage, with the value of this type of property increasing to £258,900 year-on-year in December 2020.
Through this, you’ll secure a special and more cost-effective mortgage that enables you to rent the property out to a tenant in exchange for a monthly income. This is why buy-to-let properties are completely separate from your home, as you’ll need a house in which to live while profiting from one or additional pieces of real estate.
Your profit will be determined by the difference between your monthly mortgage payment and the total rental price, and while it’s tempting to maximise this sum, the rent must be set at a rate that the market can realistically sustain.
2. Consider Equity Release
If you’re a more mature homeowner aged 55 or over, you may also want to consider opting for an equity release to release funds.
Of course, much will depend on the level of equity that remains in your home, while equity release is typically only available to older property owners who have paid off much or all of their original mortgage.
In simple terms, an equity release mortgage enables you to access the wealth and equity that exists within your home, creating a potentially sizable lump sum that can really boost your retirement plans.
3. Renting Out a Room or Storage Space
If you want to profit from your home while retaining the right to live there, another option is to rent out a single room or space within the property.
This would involve renting out a bedroom to a single tenant, while allowing them shared access to your kitchen and living space if the circumstances allowed. Obviously, this is only really suitable for single people, such as students or travelers who have the requisite space in their home.
On a similar note, you could also rent out a viable and in-demand storage space that you don’t use, such as a garage.
There are even apps through which you can advertise the unused space on your driveway or outside your home, which may be snapped up by people looking for parking in busy, built-up areas.