Daily Deals from a Nerd Mom

Mortgages are a pretty big expense, but you may not know that there are certain financial benefits to owning a home. Your home can work for you as an investment and provide a more stable foundation for income. From rental income to building credit, here are some examples.

Long-Term Financial Stability

Your home can actually help you when you need it. Everyone has life events, and some can cost a lot of money. Emergencies, acts of God, and even a new baby can be pretty expensive. However, you don’t need to worry about huge expenses when you own a home. Reliable home equity lenders offer you the ability to borrow money against your home, often with pretty favorable terms. So, you can make those big purchases or investments with peace of mind.

Access to Rental Income

There are many people looking for a good place to live. Whether you lease a single room, floor, or the whole house, your property can bring in a significant amount of money. This money can be used to maintain the home, pay off its or your other home’s mortgage, or accrue for savings. Of course, there are some rules and regulations around being a landlord, and it can become a full-time job. There is also a limit as to how much income you can earn before paying taxes.

Tax Benefits of Owning a Home

Further to taxes, home ownership can impact how much you pay. 25% of British homeowners are currently struggling to pay their mortgage, and choosing a new place to live can be a chore. However, tax relief from your property can have a massive positive impact on your finances:

• Mortgage interest relief can save money on tax payments if your mortgage is large.
• Private residence relief is a tax benefit if you have lived at your home for a long time.
• There are certain council tax reductions available for some homeowners.
• You can earn up to a specific amount using the current Rent-a-Room scheme in the UK.
• Investing in high-efficiency homes can qualify you for government grants and benefits.

Some of these are specific to the UK, for example, but other countries have similar schemes.

Building Your Credit Score

One of the greatest benefits of owning a home is that it has the potential to dramatically increase your credit score. Just being accepted for a mortgage is a good sign and sets you on the path to good credit. Also, making your mortgage payments signals to lenders that you are responsible with money and can be trusted. In turn, your credit score increases. This is important as it means you can access a wider range of products and more favorable loan terms.

Predictable Personal Budget

You can more easily manage your personal budget when you own your home. For instance, you always know what your mortgage payment will be. This makes it easier to manage the monthly budget and plan ahead. However, if you are lucky enough to have paid off your mortgage, it also means you have access to more money and remove a major bill from your outgoings. This money can be used for investments, savings, or even a down payment on another property.

Long-term financial stability is one of the benefits of owning a home. You can also obtain some tax relief and benefits and acquire greater control over your personal budget and finances.

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