The ability to build equity is one of the main benefits of owning your own home. It is a large reason people choose to buy over rent, and is extremely beneficial in the long run, as equity often builds over time, ultimately putting you in a much more comfortable financial position. However, with the exception of the simple passing of time, there are other ways in which equity can be accumulated.
Okay, this is where those hard-earned pennies have hopefully gone- towards a larger down payment. Putting a greater sum of money down on the new home initially is a great way to ensure you have greater equity right off the bat. You now own more of your home and owe less on it- plus, your money has gone to a good cause that will only build on your financial health and success in the future. Plus, those dollars aren’t sitting in your bank account begging you to take them on a trip to Jamaica…
Pay the mortgage
Oh, you thought it was just one of those sneaky little bank gimmicks? Guess again. Paying off a portion of your mortgage each month ultimately results in you owing less money on your home, and actually owning more. Sure, it is one of those annoying monthly transactions, but it is in your best interest to make and keep up with those payments because it will lead to the fruitful path of 100% homeowner sooner.
Extra principal payments
It’s time to be an adult about things, and yes, add more money to your monthly payment. This might seem like torture at the time, perhaps because you desperately wanted to spend that extra money dining out on Thai every night, but chipping in more now not only leads to owning that home faster, but spending less interest on those pesky payments. It’s win-win, basically.
Shorter mortgage term
A shorter mortgage term translates into less interest and faster home ownership- need I say more?
Increase in value aka home improvements
Sure, under favourable market conditions your home will increase in value anyway, but there are also things you can do to ensure that the value increases at this very moment. By improving certain features of your home, you can ensure you will be receiving a greater return upon sales day. Remodelling work done in bathrooms and kitchens tend to be the most advantageous and guarantee you a maximum return, but make sure the improvements made don’t just come out of your pocket, but are efficient in increasing the overall value of the home.