How Does The Property Ladder Work?

[Barquentine]

If I buy a property that goes up in value I can see I have more equity to put to the next property, but the second property will have risen in value as well. I simply can't see how owning a property helps you to move up to a bigger property. You would still need to find the extra money the next property has gone up by. Could anyone help me understand? Many thanks

[woofgang]

Its not quite as easy as that. You will probably also need a mortgage but you will have the equity in your house. This also assumes that as you get older your salary will increase, also that property values will increase noticeably. What getting on the property ladder instead of renting does is gives you something for your money. You can pay rent for ever and you won't get any nearer owning the place you are living in.

[kjn2]

Moving into an area that is not so expensive , buying a property that needs improvements are other ways of getting up the property ladder which will enable you to have a bigger house, Plus buying at Auction is a possibility.

[Peter Pedant]

well clearly no one is making any money .....


This occurred in Tokyo in the eighties - houses were changing hands for something like ten billion yen ( tens of millions of pounds sterling ) and the prices were so high in T and so low else where that commentators were saying the market would solidify - or grind to a halt.

[VHG]

Gradually you pay off the mortgage (very gradually) so the rising value of the house, and the decreasing amount you owe on the mortgage, give you more equity in the house.

You can use this equity to put more equity into another house.

Also buying and selling at the right time can help.

House prices go up and down, and you get sellers markets and buyers markets.

Buy when house prices are low, and in a buyers market where you can knock down the price of the house you want to buy.

Buying at the moment is a bad time as house prices are (or were) rising and it is a sellers market (though that is gradually changing).

It is possible to "make money" with house buying but you have to buy and sell houses at the right time, and be prepared to "do up" houses so you can sell it for more than you paid for it.

But it is quite an art.

Watch "houses under the hammer" on TV for how it is done.