Last Updated on June 18, 2026
Should I stretch my budget to buy a home?
Most people stretch their budget to buy the biggest house they can afford. This makes sense in so many ways, especially if you are young and planning a family in the near future. But what if buying a more modest home and investing the difference could actually make you wealthier over the long term?
Compare home buying alternatives
Our calculator helps you compare different property prices and illustrates how investing the difference in the mortgage payments can grow over time. The calculator accounts for mortgage payments, house price appreciation and investment growth to give you a detailed comparison. You need to enter the following details:
- Property price
- Property deposit
- Mortgage rate
- Mortgage term
- Estimated annual house price growth – this is a big unknown, so keep it small between 1% and 3%.
- Stamp duty – use our stamp duty calculator to work out the figure, or our first-time buyer stamp duty calculator if it’s your first home.
- Legal and survey fees
- Investment returns – the stock market returns around 7% to 8% annually.
- Number of years that you want to compare the figures.
What the house comparison calculator does
The calculator assumes you can afford the bigger property, and by choosing to purchase a cheaper property, the money saved from lower mortgage payments is invested over the life of the mortgage.
House calculator – modest house versus bigger house
Modest House + Invest vs Bigger House
Compare buying a smaller, affordable home and investing the difference in cost against buying a larger house.
The modest home covers your needs comfortably. The monthly mortgage is lower, freeing up cash each month to invest.
The bigger home requires a larger mortgage. The higher monthly cost leaves less cash available each month.
The monthly mortgage difference between the modest and bigger house is invested each month into a portfolio. The deposit difference is also invested as a lump sum from day one. Whichever mortgage finishes first, that household’s freed-up payment is added to its monthly investing for the remaining years of the comparison. Returns are compounded monthly.
This calculator is for illustrative purposes only and does not constitute financial advice. All figures are estimates based on the inputs provided and assumed rates of return. The calculator assumes that all investments/savings are held within a tax-free ISA, so excludes any potential tax liabilities. Property values and investment returns can go down as well as up. You should seek independent financial advice before making any property or investment decisions.
More information
This calculator has been designed for a general comparison between purchasing a larger property or a more modest property, and investing the monthly difference. It is intended for illustrative and informational purposes only.
The figures generated are based solely on the inputs you provide and several assumptions, including constant mortgage interest rates, consistent investment returns, and steady house price growth over the selected period. In reality, all of these variables will fluctuate, and actual outcomes may differ materially from those shown.
This calculator does not constitute, and should not be construed as, financial, mortgage, or investment advice. It does not take into account your individual financial circumstances, tax liability, risk appetite, or long-term objectives. Moneyquids is not authorised or regulated by the Financial Conduct Authority (FCA).
You are strongly encouraged to seek advice from a qualified and FCA-regulated independent financial adviser before making any decisions relating to property purchase, mortgage products, or investment strategies.