Should I pay off my mortgage or invest the extra?

Free calculator: compare paying down your mortgage faster (less interest, earlier payoff) with investing the same extra monthly amount at an assumed return—not advice, just estimates.

Loan
Fixed-rate loan: one APR for the full term.
%
Extra toward principal (monthly)

Amount you might add to each payment if you prepay.

Scheduled P&I$2,528 / mo
Investment assumption
Illustrative annual return for extra payments invested instead. Override anytime.
%
Results
Comparison at your original loan payoff date unless noted.
Payoff earlier by
10 yr 7 mo
Mortgage interest avoided (prepay)
$205,557
Invest extra instead — balance at original payoff
$584,726
Loan paid off (with extra)
20 yrs (233 mo)

At your assumed return, investing the extra $500/mo could grow to about $584,726 by your original payoff date—more than the roughly $205,557 in mortgage interest you’d avoid by prepaying. That gap is not guaranteed; markets and your actual loan costs may differ.

After you're mortgage-free early

If you prepay and end the loan early, you could invest your freed payment each month from payoff until when the loan would have ended. Default equals your scheduled P&I.

That strategy's balance at original payoff date
$467,876
Cumulative growth (illustrative)
Year-end balances along your original loan timeline. Not a forecast.
How this works
What the calculator is comparing, and what the headline numbers mean.

You enter a fixed-rate mortgage (principal, APR, term) and an extra monthly amount. The tool compares two uses of that extra: prepaying principal versus investing the same amount each month at the return you assume—not a prediction, just math on those assumptions.

Most comparisons use your original scheduled payoff date (the end of the loan term if you only made scheduled P&I). Mortgage interest avoided (prepay) is how much less interest you pay over the life of the loan if you add the extra to principal every month, versus making no extra payments. Invest extra instead — balance at original payoff is how much you could have if you invested that same extra every month through that same original payoff month, at your assumed annual return (converted to an equivalent monthly rate, with contributions at month-end).

The loan side uses standard US-style amortization: monthly interest on the balance. If prepaying pays off the loan early, the optional after you're mortgage-free early block estimates investing your freed scheduled P&I each month from early payoff until the date the loan would have ended anyway, still at the same assumed return—so you can contrast "invest the extra while paying the mortgage" with "prepay, then invest what you used to pay."

FAQ
Common questions about what is—and isn't—included.
Is this investment advice?
No. It is an illustrative calculator for your own exploration. Talk to a qualified professional about taxes, investments, and your loan.
Are the returns guaranteed?
No. The investment side uses the annual return you type in. Markets vary; the numbers are “what if this steady return happened,” not a forecast.
Why does prepaying sometimes look better than investing?
Usually because the assumed investment return is lower than the effective benefit of paying less mortgage interest over time, or because the comparison window and amounts line up that way. Change the assumed return and the story can flip—neither outcome is guaranteed.
Do you include taxes?
No. Mortgage interest may be deductible for some people, and investment returns may be taxed differently than loan interest saved. The tool does not model tax outcomes.
What about escrow, PMI, or HOA?
Only principal-and-interest on a fixed-rate loan is modeled. Escrow (taxes and insurance), PMI, fees, and refis can change real-world results.
What does “expected annual return” mean here?
A single yearly rate you assume for the invested extra cash. The math converts that to an equivalent monthly rate and compounds month-by-month with your monthly contribution (end of month), so it lines up with the monthly mortgage schedule.
What counts as the “extra” payment?
The amount on top of your scheduled P&I that you either put toward principal or invest each month. It does not change your required scheduled payment in the model.
What does the chart show?
Illustrative cumulative balances by year along your original loan timeline: one line for investing the extra each month while the loan runs, and when relevant a line for investing freed payments after an early payoff. It is not a market projection.