Sell your home! A buyer can choose to go straight to a bank for the mortgage, or they can ‘burn’ their house to invest in shares and create a freehold and keep their profits. Buyer burn is a simple option that could help people on the lower end of the housing market if their finances are falling away fast. It is thought that people could make up to £100,000 a year selling their homes to raise capital. Selling your your Long Island home for cash can be a great god-send.
“You can do a whole lot with investment house purchases, because you don’t need to hit a sales price and the full mortgage cost upfront. You don’t have to buy a new piece of land and when it’s time to sell, you don’t have to put up the full mortgage again.”
Burning houses could put you a lot of cash. This savings can help you buy more, and possibly into a different asset class. Glyn Thornton, Asset and Wealth Manager at PWC, tells us why:
“People need to see the benefits of having bought their house in the first place and get a grip on inflation and perhaps allow themselves to think that, with the right moves, they can keep some of the equity in the home. With the average UK household now spending almost 50% of its income on housing, for many people a good deal in a freehold asset is probably more attractive than a mortgage that can be increased later on through interest rates.”
Plenty of people can afford to buy a new freehold property, meaning that the landlord can retain some profit if you end up selling your house. This can make it less of a financial worry for those who may not be able to afford a new home, but it’s also a great thing if you want to be more resilient in your spending habits.
The bigger you get
If you’re keen to buy a new freehold property, then you’re most likely in for a shock. You’ll have the mortgage payments and property tax, plus the cost of housing.
From our research, that costs between £50,000 and £70,000. Although you could save a lot of money buying a smaller property, if you’re saving every penny you can still save big.
If you don’t want to mortgage or tax, there are also alternative ways of saving. These can be borrowing against your savings or investing the cash in shares, bonds or shares in your new property.
You can take out a loan or even an interest-free loan to fund a new property purchase.
Read our housebuyer’s guide to help you determine if you can afford a home
Freehold vs. residential mortgages
It is possible to buy a freehold house, regardless of whether you plan to live there, by buying it in a commercial investment property (CIP).
However, the biggest issue is getting a mortgage. This is because mortgages are based on the value of the property. Your ability to make a mortgage payment depends on your property’s value and the loan you apply for.
See Mortgage vs Freehold for tips on deciding which loan to apply for
If you are a first-time buyer, you need a mortgage
Once you’ve found a property you love, you may not want to continue living in it for the long term.