Why Working From Home Is Not As Cheap as You Thought

Amid the ease of lockdowns all around the world and with more companies encouraging working from home to be the new norm, how does this affect our mortgage?

In 2020, Covid-19 changed our lives by not only affecting the way we work but also how we as social beings interact.

Since then, we have seen the rise of virtual meetings, Zoom weddings, and more digital ways of staying connected.

However, for most people working remotely or laid off without a steady source of income, mortgage repayments have become strenuous.

With this reality, let’s begin by familiarising ourselves with what a mortgage is and then discuss how it affects remote workers.

What is a Mortgage?

A simple definition of a mortgage is a type of loan you can use to buy or refinance a home.

A mortgage is usually suitable for most people who do not have the income to buy a home without having all the cash upfront.

Nevertheless, mortgages can also be used as investments to free up funds for other purposes.

Now, to be eligible for a loan, one has to meet certain requirements which you can find here.

Working From Home

As mentioned earlier, the COVID-19 pandemic forced companies to restructure their operations, leading to more employees working from home than ever before.

Employees that were used to working in brick and mortar office locations were now obliged to work from home in order to practice social distancing.

With this sudden change, there is the perceived notion that working from home is ‘easier’ than working from office locations and this could not be further from the truth.

Advantages of Working From Home

Working from home has its benefits both for the companies and workers themselves such as;

• Workers who spend an average of 2 hours daily in long commutes and sitting in traffic can now use those hours to be more productive.
• Also, with rent being one of the highest costs of running a business, companies have begun to realize that they can save money on rent spaces and/or reduce their office spaces in order to save costs.
• Companies also find that employees working remotely are more productive and;
• Companies now have more flexibility in recruiting.

Disadvantages of Working From Home

With all the benefits of working from home listed above, it is easy to think that remote work is absolutely perfect.

According to the National Bureau of Economic Research, there is a hidden cost of working from home, which is increased spending.

They explain with statistics that employees who are suddenly directed to work remotely, often have to find a different location.

This could either be within their homes or close to their homes in order to get work done.

Furthermore, it is estimated that adults that worked from home spent more money on mortgage and property taxes that were 8.4% to 9.8% higher than others who do not work from home.

The hidden costs of equipment, desks, ergonomic gaming chairs, and other related expenses are also hardly mentioned.

This rise in rent or mortgage costs has led remote workers to look for cheap housing in neighboring cities, therefore causing a rise in housing costs.

In addition, there is no conversation on the stress, distractions, and even loneliness that can arise from working from home.

Working from Home and Mortgage

Now that we understand that working from home is not as easy as it is made to be, how can we make better decisions relating to remote working and our mortgage?

The first step is to evaluate the cost of working from home and how it affects your mortgage loan repayments.

You can begin with calculating your current local mortgage rates using Mortgage Calculators.

I recommend this mortgage calculator because of its clean and fast user experience that helps you understand your monthly payments, minimum income requirements, home loan limits, and more.

My favorite feature is the advanced mortgage calculator that allows you to input property tax, interest rates, loan terms, and more.

Once you have an accurate view of the costs of working remotely as it pertains to your mortgage, then you can ascertain if the costs of moving or renting cheaper housing in another state are feasible for both you and your family.

Final Thoughts

The long-term effects of working from home are currently undefined and unpredictable but knowing that we are all in this together is reassuring that we will overcome the challenges of working from home as the new norm.