If you have the means to buy a luxurious and expensive home, then you’re probably doing really well for yourself. Maybe you’ve got an excellent job that pays well or perhaps you’ve just learned to be incredibly frugal with your money. Either way, being able to purchase an expensive home is a huge status symbol and a testament to your ability to manage and generate wealth.
But is it a good idea?
Most people wouldn’t even think about purchasing an expensive home simply because it’s not needed. They might prefer to get a mortgage on a home that is just right for them, or they might decide to purchase an inner-city home because it’s more convenient. Unlike many other purchases, buying an expensive home just seems like a huge cost that doesn’t provide much benefit.
But provided that you can actually afford to buy a more expensive home, is it something that you should actually consider? Does it even make financial sense?
Not all luxury homes will increase in value
One of the best reasons to purchase an expensive property is to see its value grow. However, not all luxury properties are situated in areas where the value will increase. For example, if you purchased a mansion out in the middle of nowhere, then you’re probably paying a lot of luxuries and unique designs that will generally depreciate over time. What increases property value is often the land that it’s built on and its location.
With that said, if you’re able to look for luxury properties in densely-populated areas, then those properties have a much higher chance of increasing in value due to their location and desirable nature. Sites like https://www.camijoneshomes.com/kansas-city-homes-for-sale/ are a great place to look for luxury homes in city areas. In short, if you’re thinking of investing in an expensive home to sell later in the future because it can increase in value, think twice about where the property is and what you’re paying for.
Do you have financial security or just a lot of savings?
There’s a big difference between actually having financial security and just having a lot of savings. Savings will eventually run out, even if you have enough to put a deposit down on an expensive home. However, financial security means that you’re able to consistently generate enough income to pay for something like an expensive mortgage. It’s important to ask yourself if you’re actually able to afford an expensive home based on your income and budgeting, and not so much the fact you have a lot of savings.
Whether you run a business or have a solid job, the question of job security is always a concern that you have to think about. Not everyone can 100% say that they’re not at risk of losing their job in the near future, especially given how uncertain things can be in life. Before you decide to purchase any kind of property, make sure you have the financial means to do so.