Pay Off the Mortgage or Invest?
Assumptions on sliders · method reviewed September 7, 2026
Sends the same extra dollars each month down two paths, to the mortgage or into an investment, and shows where each stands when the mortgage would have ended. AboutLess
In plain words. Paying extra on a mortgage earns the mortgage rate, for sure, and ends the loan early. Investing the same money earns whatever the investment returns, which is not for sure. This tool runs both month by month for the years left on the loan. On the first path the extra goes to the mortgage until it is gone, and then the whole payment is invested. On the second the extra is invested from the start while the mortgage runs to its end. It shows the months and interest saved, and the position each way at the end.
Why it matters. It is one of the most common questions a household with a little room in the budget asks, and the answer is usually argued on feeling. A number for each path lets the feeling, which is about certainty and about being debt-free, be weighed against the size of the gap.
An example. $300,000 at 6% with 25 years left and $500 a month extra, against a 7% return: to the mortgage, the loan ends 8 years and 11 months early and about $112,299 of interest is saved, and the position at the original end date is about $363,745. Invested instead, about $405,036, so investing is ahead by about $41,291 at that return.
Where it stops. The expected return is a guess, and it decides the answer. The tool holds the rate and the return steady, pays no tax on the investment's growth, and deducts the interest only if you say you itemize. It leaves out mortgage insurance, prepayment penalties, the emergency fund you should keep first, and the risk that the investment does something the average does not. Everything it leaves out.
What you still owe. It is on your latest statement.
On top of the regular payment. The same amount goes down both paths.
- Time cut from the mortgage
- 8 years and 11 months
- The loan ends in month 193 instead of month 300
- Interest saved by paying early
- $112,299
- Over the term, before any deduction. The regular payment is $1,933 a month
- Investments at the end, each way
- $405,036
- With the extra invested throughout. With the mortgage paid first and the freed payment then invested, $363,745
At month 193, when the mortgage path is clear, the invested path holds $177,662 against a balance still owed of $159,870. That is a net position of $17,791, against $1,978 for the path that is now debt-free. From there the debt-free path invests the whole $2,433 a month.
The plain rule is a sure return against an expected one. Extra to the mortgage earns the mortgage rate with no risk and no tax. The investment may earn more or less, and no year of it is guaranteed. Money sent to the mortgage is also locked in, since it cannot be taken back without selling or borrowing, while the investment can be sold. When the return equals the mortgage rate the two paths end to the cent, so the answer is the gap between the two rates and how sure you are of it.
This is an assumption tool, and the return is yours to set. It sends the same cash down both paths every month, holds the interest rate and the return steady, pays no tax on the investment's growth, and deducts the interest only if you say you itemize. It leaves out mortgage insurance, prepayment penalties, the emergency fund to keep first, and the chance that the investment does something the average does not. Method reviewed September 7, 2026. Hypothetical; educational, not advice.
This is a simplified model, not your actual tax return or plan. It only knows what you type in, leaves out rules that may apply to you, and cannot weigh the other facts and trade-offs a real decision depends on. Before you act, talk with a professional who knows your whole situation.
Educational only, not investment, tax, or legal advice. Results are hypothetical estimates that vary with each use and over time and are not guaranteed accurate or complete. Using this tool creates no client relationship with Considerate Capital, and the site that linked here is not affiliated with it. By using it you agree to the tool terms.