Pay Off Mortgage or Invest Calculator
Compare putting an extra monthly budget toward mortgage principal with investing that same extra amount. Both scenarios use the same total monthly budget and comparison horizon. Investment returns are hypothetical; the result is a scenario comparison, not a recommendation or a promise of future returns.
Read Pay Off Your Mortgage or Invest? How to Compare the Numbers for a worked example, equal-budget assumptions and an explanation of the remaining-debt comparison.
How the two mortgage scenarios work
Prepay first: pay the regular principal-and-interest amount plus the extra budget toward the mortgage until it is fully repaid. Invest the unused portion of the final payment budget and the full monthly budget afterward.
Invest extra: keep making the regular mortgage payment and invest the extra budget each month. After scheduled repayment finishes, invest the whole budget. Neither scenario stops its budget when the mortgage disappears.
Compare the same budget over the same horizon
Suppose the outstanding balance is $100,000, the fixed mortgage interest rate is 6%, the regular principal-and-interest payment is $1,000, and the additional monthly budget is $200. Both scenarios therefore use $1,200 per month. Enter a 10-year horizon and a hypothetical 5% effective annual investment return to compare them.
The investment balance alone is not enough: one scenario may still have a mortgage. Compare investments minus remaining debt at the same horizon. This calculator also shows mortgage interest paid and the modeled payoff month.
Interest, growth and payment timing
Mortgage interest is modeled monthly as annual nominal rate / 12 on the outstanding balance, rounded to the nearest cent each month. Payments occur at month-end, with no new borrowing. Extra payments reduce principal and shorten repayment; the regular payment is not recast downward.
Investment growth uses (1 + annual return) raised to the power 1/12, minus 1. Each month's growth applies before the month-end contribution. Investment growth is kept unrounded until display. The model assumes a constant return, not a changing market path or a measure of risk.
What the comparison leaves out
The calculator does not model taxes, mortgage-interest deductions, investment fees, capital-gains taxes, prepayment penalties, mortgage insurance changes, adjustable interest rates, inflation or emergency-fund needs. If you choose a return assumption intended to allow for some investment costs, that remains your assumption; the tool does not calculate those costs separately.
Property tax, insurance, maintenance and home value are assumed the same between scenarios and excluded. Paying down a mortgage and holding investments also have different liquidity and risk characteristics. A positive modeled difference is not proof that a strategy is suitable for you.
Input limits and related tools
Supported mortgage balance is greater than zero up to $10 million; regular payment and extra budget are each up to $100,000 per month. Mortgage rate is 0% to 25%, horizon is 1 to 50 whole years, and the annual return assumption is -50% to 50%. These software limits do not validate any assumption as realistic. Projections above $1 trillion are rejected.
The regular payment must exceed the first month's modeled interest. For a new loan payment estimate, use the Mortgage Payment Calculator. For a separate growth projection, use the Compound Interest Calculator.
Inputs are calculated locally and are not saved or transmitted by this calculator. The hosting website may have separate analytics and privacy practices.
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