Ten years ago, I
bought a house with a twenty-year mortgage.
It has been an emotional decision and, as I am about to become mortgage free,
I would like to share some considerations and costs.
I will look at it
as an investment and compare it with other investment opportunities.
House bought in
2016 for 475,000. House cost in 2026: 600,000
Total money paid:
- Initial deposit: 150,000
- Legal cost and tax: 14,500 (1,500 + 13,000)
- Three one off over payments over years: 34,000
- Monthly payments over ten years: 211,000
- Total paid to the bank: 395,000 plus initial cost 15,000
Still owe: 130,000
to the bank. Interest paid: 50,000
My preference was
to lock the mortgage as fixed interest. First
five years the mortgage interest was 2,7%, the last five years 1.4%. I have
also maintained monthly payment the same from the beginning, even with all over payments. Last year I was overpaying 400 a month. The house grew in value 125,000 over ten
years or 2.3% a year.
We bought it
emotionally and the sellers’ agent used our feelings to full extend – we overpaid
25,000 over sticker price. This is despite that we had no ongoing chain – the seller
got their money straight away, without any waiting.
Opportunity cost.
