MORTGAGE EXTRA PAYMENT VS INVEST · RUNS IN YOUR BROWSER · NOTHING UPLOADED

Pay extra on the mortgage, or invest the money?

Enter your loan and the cash you could put to work. The tool runs three paths with the same money every month: keep the mortgage and invest, pay the loan down faster, or put a lump sum in and recast. It shows what you end up with after tax when the original term would have ended, the months and interest saved, and the investment return at which investing and prepaying tie.

Planning arithmetic on numbers you type in. Not legal, tax or financial advice. The example figures are placeholders, not a recommendation or a real loan.

1. Your loan

2. The money, and what it could earn

Questions people ask

Should I pay extra on my mortgage or invest the money?

It comes down to one comparison: the return your mortgage rate guarantees against the return you expect, after tax, from investing. Paying down a 6.5% loan is a certain 6.5% (less any tax saving on the interest). Investing has to beat that by enough to cover the tax on its gains and the risk of a bad stretch. The tool runs both with the same cash every month and shows the investment return at which they tie.

What is a mortgage recast and when does it beat paying extra?

A recast means paying a lump sum toward principal and asking the lender to re-amortize the remaining balance over the same term, which lowers the monthly payment. Lenders usually charge a small fee and many require a minimum lump sum. It beats simply prepaying when you want the lower required payment for cash-flow safety; the tool invests the payment drop so you can see the cost of that choice.

Why does the tool use the same cash every month for all three paths?

So the comparison is fair. In every path you spend the same total each month and the same lump sum today. What changes is only where the money sits: in the loan, which stops charging interest, or in an investment account, which earns a return. Wealth is compared when the original loan term would have ended.

What return should I enter for investing?

A realistic long-run figure you would stand behind, before tax, and not a hot recent year. Stock-market averages are volatile, and the comparison is not risk-adjusted: the mortgage payoff return is certain and the market return is not. Try the sensitivity table across 2% to 12% to see where the answer flips.

How are taxes handled?

Two simple inputs. Tax on investment gains is charged once on the gains at the end, as a single flat percentage. The optional interest tax saving is the share of each month's mortgage interest you get back in tax because you itemize; leave it at 0 if you take the standard deduction. No tax table is built in because the rules change.

Is this financial or tax advice?

No. It is arithmetic on the numbers you type, with simplifications: fixed rate, constant investment return, no payment of insurance or escrow, no prepayment penalty, no emergency-fund or liquidity value. Home equity is hard to get back out, which the numbers do not price. Confirm with your own adviser before you decide.

Not decided

Whether you are comfortable with the risk, since the loan payoff return is certain and the investment return is an assumption held constant here. Also not modelled: adjustable rates, escrow and insurance, prepayment penalties, private mortgage insurance dropping off, emergency-fund and liquidity value of cash you keep, retirement-account tax advantages, and taxes on dividends along the way. One loan at a time.

Related tools: the mortgage points break-even calculator, the HELOC vs cash-out refinance calculator, and the mortgage escrow analysis checker.