How financially secure is your future? I was always on the ball and paid into a pension scheme despite not actually being required too. I was not required to opt in because I worked part time. However I knew that I needed to have a money in my older age. With a growing life expectancy and a reducing state pension every single person needs to act now to take care of their future.
I was probably more switched on to this than many because it had been covered in my degree course as part of social policy. There just isn’t the money to go around. In the past few years we have all realised this more and more especially as benefit cuts have been at the forefront of government policy.
Now that I am self employed I need to look at my pension pot. I don’t now have an employer to top up my contributions and it does concern me somewhat. The only drawback I see to be self employed is losing some of the financial benefits associated with employment. In addition to my pension I also now have to do my own tax – I plan for this throughout the year putting aside money every month to cover that bill. To anyone self employed – remember to file your tax return before the end of January to avoid a late fee.
Another way to save for your future is to invest your money somewhere. Property is usually a great investment as long as you can invest fully and sit through any dips in the market.
With Chloe heading off to University in a few years I have considered the cost of accommodation for her. I remember that a few of my friends at universities actually had parents buy a house that provided their child with accommodation and also made some money by renting out the other rooms to fellow students. This seems clever and something that I am considering for the future. This would yield a passive income. Plus also provide me with a way to grow my investment and prepare for my future.
Buying a second property is a big decision and clearly you would need advice and support to make sure it is the right decision for your circumstances. Abacus Law can offer advice so that individuals make the best financial decision.
Top Tips for Buying a Second Property to Let, to Secure your Future
- Know how the stamp duty works as recent changes have affected the cost of purchasing a second home. Since April 2016 there were changes to stamp duty which buyers need to be aware of. Second homes have been subject to a three per cent stamp duty surcharge. Under the banding system, second homes worth less than £125,000 now attract three per cent tax instead of zero. Those worth between £125,000 and £250,000 now have a five per cent rate. However it could still be worth investing in a second home.
- Research the area well. Is the area up and coming as this is where you can make the most money. Look at how the area is set to develop and buy at the right time.
- Factor in the maintenance costs – as a landlord you will have legal responsibilities about the condition of the home and the upkeep of the home.
- Know your tenant and decorate it according to their needs. If like me you are considering students then study areas and desks are required.
- Consider whether you want to deal with the day to day running of the house or instruct an agency to be on call and take care of things. This obviously costs and reduces your income.
I plan to live a long and healthy life and I plan to have the money to make that a pleasurable experience. We will be mortgage free and have a good disposable income to live the life I want. This will include plenty of travel. What do you want to spend your money on in the future?