Warning! The Hidden Costs of Property Investment

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There can be no doubt that choosing to invest in the property market is a wise move. It doesn’t matter if you own property in the UK, or across the pond in the US. Real estate is always going to give you a certain amount of financial leverage. This was true twenty years ago, and it’s true now. However, as with any other financial investment, there can be no guarantees. But considering the current instability of the British economy, any form of financial leverage is something that’s certainly not to be sniffed at.

However, when making such a large financial investment, it’s essential that you go in with your eyes open. You may have saved a deposit, and factored in solicitor’s fees and your mortgage repayments, but are you aware that the cost doesn’t end there? There are other ‘hidden costs’ which could trip you up if you don’t take care to consider them before tying yourself into a mortgage. So, to help make sure you avoid getting yourself into a sticky financial situation, here’s what you need to watch out for.

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Bridging Loans

The difficulty with the current UK housing system is that even though you may have found the house of your dreams, you still may not be in a position to make an offer. If you already own a property, the majority of people are financially tied until they’re able to sell their home. This is where bridging loans come in. A bridging loan is designed to allow people to make an offer on a property without having to sell their own. However, this does come at a price, so it’s a cost that you need to factor into the overall expense.

A bridging loan calculator is one way to do this. It can help you to work out whether you’re in a position to meet the extra financial obligation.

Building & Renovation Costs

Many people invest in the property market hoping to make improvements to the property in question, and then sell it on for a tidy profit. This is undoubtedly a shrewd financial move. But if you really want your investment to pay off, you should consider the following points before putting in an offer.

For example, is the house an older property with a grade II listing? If it is then, you’re limited in terms of what renovations and improvements you can make. Maybe you wish to build an extension on a new build instead? Even then you could still run into obstacles. If the soil is isn’t of the right consistency, the council won’t allow you to proceed. Then you’ll be faced with having to pay for a structural engineer to ‘sign it off’, which doesn’t come cheaply. Gaining planning permission is easier than it once was. For instance, you can obtain a complying development certificate for your renovation projects with the help of firms like CIVAC. These firms can help obtain permissions for construction projects from the local council quickly. But unless you know what you’re doing, it can still sometimes end up being a costly, stressful and lengthy process.

This post wasn’t written with the intention of scaring you. We just want to ensure that you’re going into property investment with your eyes open, to make the road to financial success a little bit easier.

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