Mortgage rates have risen again! Landlords who have already felt the squeeze of section 24 are wondering, is it worth renting out property now?
Whilst times are undoubtedly going to be a bit tough over the next year to eighteen months we believe that it’s still very much viable to continue to invest in property and grow your portfolio for the long term gains.
Landlords should consider seeing out potential increases in mortgages to gain capital growth for several reasons:
Increased property value: Over time, properties generally appreciate in value, leading to potential capital gains. By holding onto the property and weathering mortgage increases, landlords can benefit from the appreciation and sell the property at a higher price in the future.
Rental income growth: As mortgage rates increase, landlords may be inclined to raise the rent to cover the higher expenses. Over time, rental income can increase, especially in high-demand areas, contributing to capital growth.
Equity accumulation: Each mortgage payment made by the landlord helps build equity in the property. As the principal is paid down, the landlord’s ownership stake increases. Over time, this equity buildup can provide opportunities for refinancing, accessing additional funds, or selling the property at a higher price.
Long-term investment strategy: Many landlords view real estate as a long-term investment strategy. They focus on building a portfolio of properties that generate consistent cash flow and appreciate in value over time. Enduring short-term mortgage rate fluctuations can be part of a broader investment plan to achieve long-term capital growth.
Stability and control: Some landlords prefer to maintain control over their investment rather than selling prematurely due to temporary changes in mortgage rates. They believe in the long-term potential of the property and its ability to generate stable income and appreciate in value, even with the periodic increases in mortgage costs.
It’s important to note that the decision to hold onto a property and see out potential mortgage rate increases should be based on careful analysis of the local real estate market, financial projections, and the landlord’s risk tolerance. Consulting with professionals like ourselves or financial advisors can provide valuable insights to make informed decisions.
