The Real Cost of Owning a Home: Is It Worth It?
- Sarah James
- Jul 29
- 4 min read
Updated: Jul 30
We’re taught from a young age that buying a home is a smart investment — a sign of security, adulthood, and financial stability. But what if it’s not actually the most cost-effective way to invest your money?
While homeownership often provides long-term value, the real cost can be much higher than we realise. And most of us never truly run the numbers. Let’s take a closer look at what buying a home really costs — and whether renting and investing might be a more powerful financial strategy.
The True Cost of Buying a Home
Let’s say you're buying a home for £250,000 with a 10% deposit and a 30-year mortgage at 4.5% interest.
Basic Assumptions:
House Price: £250,000
Deposit (10%): £25,000
Mortgage Amount: £225,000
Term: 30 years (360 months)
Interest Rate: 4.5% (capital and interest repayment)
Monthly Mortgage Payment:
~£1,140.04/month
Total repayment over 30 years: £410,415.06
Of that, £185,415.06 is interest alone
Additional Costs:
Total Cost Over 30 Years: £438,715.06…and that doesn’t include any renovation or ongoing maintenance.
The Hidden Reality of Mortgage Repayments
With a standard amortising mortgage, your early repayments go mostly toward interest, not the capital. You don’t actually start making a significant dent in your loan until over a decade in.
For example, by month 153 (12 years and 9 months):
Capital paid: ~£84,762
Interest paid: ~£88,781
It’s only at this point that your monthly capital repayments begin to exceed interest. That’s a long time to carry such a heavy financial load — especially if you're not planning to stay long-term.
What If You Rented Instead?
Let’s say instead of buying, you rented and invested your £25,000 deposit into a broad index fund like the S&P 500.
At an average return of 7% over 30 years, that £25,000 grows to approximately £190,306 — outpacing the £185,415.06 in interest paid on your mortgage.
Yes, you’ll still have to pay rent — but you’ll avoid:
Unexpected maintenance costs
Renovations
Property taxes
Market downturns that affect property value
And while the house may be worth more in 30 years, there's no guarantee. Which brings me to my personal story.
But Why Did We Buy?
Because we believed in the story of homeownership.
I actually didn’t want to make this move. I always knew this wasn’t going to be a permanent home for me, so I suggested renting instead. But my ex-husband vetoed the idea. His reasoning? “We’d just be paying off a landlord’s mortgage. Better to buy and invest in our own future.”
So, we bought. Want to run the numbers?
We put down a £25,000 deposit on a £250,000 mortgage, and spent around £60,000 on renovations. Here's how the break-even looked over the 6-year period we lived in the house:
The house was eventually sold for £250,000, the same price we paid for it, which seems like breaking even at first glance — but here's what really happened:
Total Invested: £170,381.88
Equity Recovered: We had repaid £24,438.24 of the mortgage, so we still owed around £200,561.76
After the sale, we cleared the mortgage and were left with £49,438.24
Net Loss: Approximately £79,618.12
Now, let’s consider an alternative.
If we had taken that original £25,000 deposit and invested it in a broad index fund like the S&P 500, between 2014 and 2019, we would have seen the following annual returns:
2014: +13.69%
2015: +1.38%
2016: +11.96%
2017: +21.83%
2018: −4.38%
2019: +31.49%
When compounded, that same £25,000 could have grown to approximately £49,400 by the end of 2019 — and that’s without the debt, stress, or countless renovation weekends.
My ex-husband wanted security. A place of our own. That deep-seated need for permanence. And emotionally, I understand that. But it came at a cost — one we didn’t fully grasp until we were knee-deep in financial strain and building dust. And one that might have been avoided had we run the numbers more realistically — or even allowed ourselves to consider that renting wasn’t a failure. It was simply another option.
When Renting Makes Sense
Renting is often dismissed as “dead money.” But here’s what rent actually buys you:
Flexibility: You’re not tied to one location and you can bend and flex easier with life.
Predictability: Your rent is fixed. Unexpected costs? The landlord covers them.
Zero maintenance stress: No surprise boiler bills or roof repairs.
Investment potential: Your deposit money could be working harder in the market.
Also, not all landlords are living large. Many use interest-only mortgages and set money aside for maintenance. Saying “you’re just paying their mortgage” oversimplifies a much more complex transaction.
And remember — every time you buy a coffee or shop local, you’re paying someone’s mortgage. We don’t criticise that. Why do we demonise rent?
The Emotional Weight of Homeownership
Money isn’t just numbers. It's stories, beliefs, identity. We’re conditioned from childhood to believe that owning a home is a life milestone. It symbolises success, adulthood, and security. But not everyone has the same emotional relationship with housing.
Some people buy because they never had a secure home growing up. Others fear rent rises or instability. Those are valid reasons — but they’re emotional ones, not necessarily financial.
Buying a house doesn’t have to be the next step. It doesn’t have to be “the dream.” For some, it’s a brilliant investment. For others, it’s a costly burden.
So What’s the Takeaway?
I’m not saying don’t buy a house.
But do run the numbers. Understand the true cost. Weigh the emotional motivations just as much as the financial ones. And most importantly, be sure the choice aligns with your long-term goals, not just societal expectations.
Home isn’t always where the mortgage is.
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