We have a nasty habit of buying the biggest property we can possibly buy with whichever bank is irresponsible enough to lend us the most.

This seems logical when we have a vision for the future — you imagine a future spouse, kids, dog, cat, hamster, or pet horse you’ll happily feed at the dining table.

And yes, moving house is expensive. Stamp duty, conveyancing, surveyors, removals… it all adds up. So, you think: Why not stretch now, avoid moving later, and get your “forever home” locked-in early?

But you’re forgetting the real, ongoing costs of buying a bigger house you don’t actually need yet.

Have you considered the following?

• Higher mortgage repayments and more interest paid to the bank.
• More stamp duty.
• Bigger energy bills.
• Higher council tax.
• Heftier insurance premiums.
• More maintenance and repair costs.
• More cleaning, gardening, and general upkeep taking up both time and money.
• A need for more furniture to “fill space”.

What about the lost opportunity cost of that money, when instead it could be quietly earning interest and growing in value, set to pay you an income later so you don’t have to work as hard?

We’re often stretched to buy our first home, and this starts a habitual cycle of ballooning as much as we can financially whenever we decide to move to a bigger property.

The problem with this is we spend our lives in as much mortgage debt as we can possibly afford.

This is how most people go about their lives, but ask yourself is this financially efficient?

The more capital you have in your own home, the less you have to live on, and the less you have to invest and build wealth.

Admittedly it’s a balance, but when you buy a property, keep in mind the costs listed above are reversed if you buy the cheapest property which meets your needs.

Could investing set you up to own an even bigger house in the future? Or better yet, could it set you up for financial independence and early retirement before your friends and neighbours?

This is an excerpt from the Minimalist Investor book, which discusses how you can invest wisely by buying the right property, and how this can generate to a much wealthier future you.