BizBritain Blog

How to Manage Your Net Worth Mortgages Effectively

Posted on February 24th, 2017

Your net worth is the sum of your total assets minus your total liabilities. If your assets are greater than your liabilities, then you have a positive net worth whereas if the other way around, your net worth is negative. Your net worth changes frequently depending on factors such as your earning, your spending and how much you save. Here are a few tips on how to manage your net worth mortgages effectively.

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How do you track your net worth?

To track your net worth, you need to first decide what will be included in the net worth statement. Remember, it is not always essential to include everything that you own. You should then decide the most appropriate tools to use in order to track your finances efficiently. A spreadsheet usually tends to be the best option. It is then important to evaluate your net worth from time to time as measuring change will allow you to work toward your financial goals such as buying a second home or saving for retirement.

Be aware of your taxes

Both your tax liability and tax savings can be modelled on a personal and limited company basis, which is why it is important to work out these figures before confirming them with your mortgage broker who will work out the relative costs of increasing finance in your name or using a limited company before making the appropriate decision. An advisor at a professional mortgage service, such as Enness International, will be able to assist you regarding your taxes, but an ideal borrower for an advanced mortgage and this type of tax strategy tend to be high-income earners who have a down payment of at least 20% of the property to use as a deposit.

Spread the potential risk

Investing all of your money into one property may seem like a good idea, but by doing so, you’re increasing your potential risk. Depending on your financial circumstances, it could be a lot wiser to spread this risk by buying a number of cheaper properties rather than one that will wipe out your savings. This way, if there is ever a time where you encounter a problem with one of the properties, you’ll still have something to fall back on. Always be aware that changes in interest rates will affect your net worth and it’s good to spend time making a judgement on the amount you wish to invest or the amount of debt you’d be willing to take hold of.

Use your primary residence wisely

If you’re considering gaining capital raise against your current main residence to go toward the cost of a new property, then you should always make sure that the mortgage funds go directly to the solicitor who is dealing with the purchase rather than into your account. Your tax advisor can, therefore, have proof that these funds were used to buy an investment property and any interest you may have been charged on the capital raise can be offset against the rental income.

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