Pay Off Mortgage Early vs. Invest Calculator
See whether extra money is better used paying down your mortgage or investing it.
Open the Interactive CalculatorHow It's Calculated
Interest Saved compares total mortgage interest with and without the extra payment. Investment Growth = future value of investing that same extra amount monthly, minus what you contributed. Whichever number is larger represents the mathematically better use of the money.
Example
Example: $250,000 remaining at 6.5% over 20 years, with $500/month extra. Paying it toward the mortgage saves about $75,100 in interest and pays off the loan roughly 7 years early (in 13y 2mo instead of 20 years). Investing that same $500/month at 7% instead grows to about $140,500 — $140,463 minus the $120,000 contributed is about $65,300 more growth than the interest saved, a modest edge for investing here since the 7% expected return is only slightly above the 6.5% mortgage rate.
Frequently Asked Questions
Is investing always better if the expected return is higher than my mortgage rate?
Mathematically yes on average, but paying down debt is a guaranteed, risk-free return equal to your mortgage rate, while investment returns are not guaranteed and can be negative in bad years — the two are not equally risky.
What about the mortgage interest tax deduction?
This calculator does not model tax effects. If you itemize deductions, mortgage interest may lower your effective borrowing cost, modestly favoring investing over prepayment.