Buying property is often the point when you start getting serious about your wealth.
Alexandria Blaelock, author of Ms Blaelock’s Book of Holistic Personal Finance says “Property is a tax-effective investment you can decorate, but it can also cost so much it prevents you from living a happy life.”
Here are Blaelock’s tips for buying property:
- Allow for additional costs: purchase and loan set up costs, taxes, duties, levies, and other charges can be a significant cost. Allow an extra 10 – 25% of the purchase price on top. And don’t add them to the loan if you can avoid it.
- Cost the loan at an additional 2 or 3%: Don’t max out your loan before it’s begun. Factor in exchange rate increases so you don’t have to sell when you’ve just moved in.
- Consider the implications of the ownership structure: It’s possible for two or more people to buy property as Joint Tenants (the property is generally split evenly and indivisibly), or Tenants in Common (you can sell your share individually). Take legal advice to get the ownership you want.
- Investment properties aren’t just houses: If you’re buying an investment property, consider buying a holiday home and renting it out. That way you’ll get discount holidays too!
- If you can’t afford a property, consider shares in a real estate trust: If you choose well, you’ll have income without the drama of property ownership.
Alexandria’s tips on setting a buying property will help you minimise the costs, and spend more when it’s worth it.
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