How I Lost €106k by Doing Nothing
I built an easy tool to prevent you from repeating the same mistake.
Buying a home is one of the biggest financial decisions you'll ever make. Yet, delaying that decision can come with massive hidden costs. In my case, a 7-month delay cost me over €106k in additional interest payments alone. Here's how it happened and how you can avoid making the same mistake.
The Numbers That Changed Everything
Imagine buying a house in January 2022 with the following terms:
Price: €390,000
Interest Rate: 1.4% fixed for 10 years, resulting in total interest payments of approximately €46,988 at year 10.
Fast forward just six months to July 2022, and I ended up buying a similar house under different conditions:
Price: €475,000 (in a heating market)
Interest Rate: 3.6% fixed for 10 years, resulting in total interest payments of approximately €153,234 at year 10.
That 2.2% jump in interest rates resulted in €106,246 expected accumulated interest costs (=€153,234 - €46,988) by Year 10.
Interest rates & home prices fluctuate: Timing matters
My mistake shows how quickly rates & home values can change and how it impacts affordability. Luckily, I built a tool to help you test different loan scenarios and time your investment wisely. Here is a how-to-guide:
Step 0. Go to the Netherlands Mortgage Calculator.
Step 1. Determine Loan Amount & Interest Rate for Scenario 1 in the Mortgage Calculator Tab. Click "Calculate"
Step 2. Scroll to the Bottom. Click "Export Amortization Schedule".
Step 3. Copy Paste the column "Interest" from the exported file into Scenario 1 column in this Google Sheet Template.
Step 4. Repeat for Scenario 2.
Step 5. Accumulated costs will automatically populate for different year ends. Based on your loan terms, you can easily determine the cost difference at Year X.
Final Thoughts
The cost of inaction can be just as high as a bad investment. By waiting, I didn't just lose time; I lost tens of thousands of euros I could have easily avoided with careful scenario planning. The Netherlands Mortgage Tool can help you model different loan scenarios. Use it to:
Decide whether to buy now or wait, and;
Understand the cost/benefit of waiting depending on how rates & home prices evolve in the future.
Appendix: The "True" Cost of Waiting
In reality, the losses don't stop there. While the immediate impact of higher interest payments is obvious, the rise in home values over those 7 months also introduced hidden costs:
1- A Missed equity opportunity of €85,000 due to home value appreciation.
2- A slower equity accumulation, which means I'll have to wait longer to build equity.
The good news is: there is a way to minimise this gap! To keep it simple, I'll address it at a later stage when I discuss refinancing options later. This will also be possible to evaluate easily with the tool in the future.
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Also - Feel free to share feedback on the tool or anything you might be missing in the comments below. Much appreciated.