A lot of people focus on mortgage as an investment but I see mortgage as a savings; a structured, tax-free, inflation adjusted savings mechanism that turned income into housing security and long term financial resilience. This argument aligned with Risk-adjusted return analysis, Behavioural economics, and Household finance theory.
How is a mortgage a savings?
A mortgage is much like an enforced, long-term savings than a true investment. Even though it comes at a cost which is the interest you pay on the mortgage. However, the capital repayment you make is saved, not spent. Depending on your repayment plan, each payment you make converts into equity and every month your equity increases.
Now let’s play with numbers in a concise and simplified form.
The figures below is based on the average interest rate in the first half of 2025.
Purchase price: £200,000
• Deposit: 10% (£20,000)
• Mortgage: £180,000
• Term: 30 years
• Monthly payment: approximately £912
• Product: 5-year fixed
• Assumed interest rate: 4.52%
Also, let us assume that the proposed 15-year wait for ILR happened and you have decided to buy a property now and sell it after getting your ILR. Also, empirically, in the UK, after 10-15 years, purely on repayment, on a 25 to 30 years repayment mortgage term, 30 percent to 40 percent of the home is typically owned outright.
After 15 years: how much is the true interest cost?
Payments made in the first 15 years
• 15 years = 180 months
• Total paid is 180 × £912 = £164,000
Mortgage balance after 15 years
On a standard repayment mortgage at this rate:
• Remaining balance is approximately between £100,000–£105,000
• Meaning you have repaid between £75,000–£80,000 of capital
After 15 years
| Component | Amount |
| Capital repaid (your equity) | £78,000 |
| Interest paid (true cost) | £86,000 |
| Total paid | £164,000 |
Note: The figures above are rounded.
Key point
The amount of £86k of the £164k is the true cost that is the cost of your mortgage.
The remaining amount of £78k is what you have saved.
My aim when I started typing this article is to keep it in a very short form, so let us stop here. I will see you at the next episode of “What’s a mortgage to you?”.
About me:
My name is Adetunji Bolorunduro and I writes for online and print publications but I put that aside when I started my PhD program. I now sit on the Advisory board of a few start-ups. In case you do not know by now, I am a die-hard Chelsea fan.
