The view from here: Buying home is one of the best options for saving



By my reckoning, it costs me about US$600 (Dh2,204) more to service a mortgage on my house than if I was to rent it. There's an awful lot I could do with an extra six hundred bucks a month.

According to figures published recently on MarketWatch, the financial investment website, more than 75 per cent of the time, renting is the cheaper option.

It's not just that rents are now lower than loans. It's the additional costs in buying a house that add up. There's bank fees, interest rates, the local taxes that municipal authorities shill out of my pocket every month and the costs of keeping the place from falling down.

If it's a rental and the pipes begin banging at two in the morning, it's someone else's cost.

Then there's that extra $600. I could trade in my Ford for something a little more eye-catching. I could buy a new flat-screen TV, an iPad and one of those enormous La-Z-Boy recliners with a refrigerator in the arm rest. Of course I would build a shed, because my wife would set fire to the chair - with me in it - if I brought it into the house.

My own modest wish list would, of course, have to compete with those of my family. Items such as Xbox map packs, whatever they are, computers, a walking robot dinosaur and something that might be a pasta maker.

This is why, as badly as property may be doing now, it remains the number one form of personal investment. According to the same MarketWatch study, 90 per cent of renters do not invest the money they save on servicing a loan. They spend it.

Even in these times of credit squeeze and negative equity, buying a house is the soundest form of saving around.

Although other forms of investment - life assurance, mutual funds, pension contributions - can be cancelled, or allowed to lapse, a mortgage is the "terminator" of investing. It cannot be bargained with.

It accepts no excuses and shows no mercy when a homeowner falls into arrears. It forces you to build wealth, when you would otherwise be up to your eyeballs in consumer goods.

It also, unusually for an investment, provides for an immediate need - a roof over your head. It's far easier to cash in a 401k, destined to pay for a distant age of retirement, than to risk being tossed onto the street.

It's easy to forget this while living in the UAE, where paying rent is pretty much the standard. But let's face it, a tax-free income and a steady job will have bank managers back home breaking out the good tea, as they shove a loan agreement in front of you. Because sooner or later, you will need a place to call home - and you might as well pay for it in dirhams while you have the chance to do so.

A stock portfolio won't keep you dry in the rain. But a house gives you something more tangible, provided you feed the monkey. To stay, you have to pay.

Even better if the mortgage is fixed low or below the market interest rate.

Inflation, the lurking evil in every economy, will appear sooner or later. It erodes the value of your savings, but also that of your mortgage. As your income rises to adjust to inflation, your bank loan will shrink in comparison. It's a neat trick.

It seems more and more households are starting to see the sense in this. The Bank of England said a couple of weeks ago that UK mortgage holders had paid back £9.15 billion (Dh42.4bn) more than they took out from their mortgages in the three months to the end of June this year.

This is an interesting number. Traditionally, homeowners have periodically refinanced their houses - for instance, borrowed more against it - as the house value increases. The money was then spent on golf lessons, holidays and new cars. Now, the opposite is happening. Many people are paying more into their mortgages than is required to pay off their house sooner.

The rate of pay back is now the highest ever since the Bank of England began keeping records in 1970.

Naturally, economists, the experts in the "on the one hand" type of argument, also point out that this has stripped £100bn out of the UK's retail sector. So the Brits are now avoiding the High Street and paying off their two-up-two-downs instead. The result: a slowing UK economy.

But that's a quibble. The changing mortgage trend is the first sign that Britain is returning to normal after a spending frenzy of more than a decade. These are the people after all, who gave us the word "parsimonious". That they are returning to this state is not such a bad thing.

Gavin du Venage is a business writer and entrepreneur based in South Africa

Dr Afridi's warning signs of digital addiction

Spending an excessive amount of time on the phone.

Neglecting personal, social, or academic responsibilities.

Losing interest in other activities or hobbies that were once enjoyed.

Having withdrawal symptoms like feeling anxious, restless, or upset when the technology is not available.

Experiencing sleep disturbances or changes in sleep patterns.

What are the guidelines?

Under 18 months: Avoid screen time altogether, except for video chatting with family.

Aged 18-24 months: If screens are introduced, it should be high-quality content watched with a caregiver to help the child understand what they are seeing.

Aged 2-5 years: Limit to one-hour per day of high-quality programming, with co-viewing whenever possible.

Aged 6-12 years: Set consistent limits on screen time to ensure it does not interfere with sleep, physical activity, or social interactions.

Teenagers: Encourage a balanced approach – screens should not replace sleep, exercise, or face-to-face socialisation.

Source: American Paediatric Association