I’m planning for the new year – how do I know if I should add to my property portfolio?
There is definitely something about this time of year that makes you want to start planning and setting some big goals, so it’s great that you’re embracing that new year energy!
Our at the time COO Naveen Jaspal has shared on TikTok that she waited too long to invest in her next property (8 years!) and she should have added to her portfolio much sooner.
It can be a scary step, so it’s understandable if you’re hesitant. Now is the time to sit down with your finances and work out if you’re ready. Here are some things to consider to help you make that choice.
Has your property grown in value?
In the time you’ve had your rental property, has the value gone up? If it has, you should certainly consider releasing that value and getting another buy-to-let mortgage.
While this can feel scary, rest assured you won’t be approved for a mortgage if the lender feels you are unable to afford it!
This is also called ‘gearing the asset’, if you release the equity from your investments, you will overall reduce your risk. With one property, a void period can be tricky to manage, as you’ll have to dip into your savings to cover the cost. However, if you have 3 – 4 properties, if one of them falls into a void period, the residual income from your other properties will get you through.
Consider the worst case scenario
What is the worst thing that could happen? You could lose your job, your property could go into a void period and you could find yourself unable to pay the mortgage on your property.
While that is every landlord’s nightmare, you can prepare for it. Rent Guarantee Insurance will cover you in the case of a tenant not paying rent and you should make sure to save up as much as you can in a ‘rainy day’ account, to cover any void periods.
Take the time to go through all of your finances and really think about why you want to grow your portfolio – are you looking to invest for your future, or your children’s future? Maybe you’re looking to build towards creating an income for yourself?
Whatever your goal, our mortgage advisors can help, so be sure to book an appointment today.