Scheduled payment on this mortgage: 1,056 per month. Both strategies below spend 1,356 per month for 25 years and end with the mortgage cleared.
The two strategies break even at a return of 4.00%. Above that the investing side finishes with more; below it, the overpaying side does. Overpaying also clears the mortgage 8 years sooner and pays 40,986 less interest.
What this does not include. The investment return is treated as a steady rate rather than a range of possible outcomes, so the investing side shows no bad cases. It also ignores prepayment penalties, rate resets at the end of a fixed period, the difficulty of getting money back out of a property, and the value you may place on owing nothing. This is a calculation, not a recommendation.
How the math works
A comparison is only meaningful if both sides spend the same money over the same period. Otherwise one strategy simply has more to work with. Both paths below cost exactly the same each month and finish on the mortgage’s original payoff date with nothing owed.
Scheduled payment = B × i / (1 − (1 + i)^−n)
where B = balance, i = monthly rate, n = months remaining
Overpay: pay (payment + extra) → mortgage clears at month m
→ invest (payment + extra) for months m+1 … n
Invest: pay (payment) → mortgage clears at month n
→ invest (extra) for months 1 … n
Compare the investment pot at month n.With no tax on either side, the break-even return works out exactly equal to the mortgage rate — a €200,000 mortgage at 4% breaks even at a 4.00% return, and both strategies finish with the same pot to the euro. That identity is what makes the rate itself the natural reference point.
Tax bends it in both directions. Tax on investment gains raises the break-even, since the investing side keeps less than it earns. Relief on mortgage interest lowers it by roughly the same proportion — at 30% relief, a 4% mortgage behaves like a 2.8% one. Our guide to the mortgage-versus-investing question works through where those adjustments come from, and the factors this arithmetic cannot capture.
The Invest vs Pay Down Debt prediction in the Wealth Path app runs the same comparison across every debt you track. For ordering multiple debts rather than choosing between repayment and investing, see the debt payoff calculator.
Frequently Asked Questions
How does this calculator compare the two options?
It holds two things constant so the comparison is fair: the same monthly outflow, and the same end date. The overpaying strategy pays the scheduled payment plus the extra until the mortgage clears early, then invests the whole amount for the months that remain. The investing strategy pays only the scheduled payment and invests the extra throughout. Both end on the mortgage’s original payoff date with the mortgage cleared, so the only difference is the investment pot.
What is the break-even return?
It is the investment return at which both strategies finish with the same amount. With no tax on gains and no relief on mortgage interest, it comes out exactly equal to the mortgage rate. Tax on investment gains raises it, because the investing side keeps less than it earns; relief on mortgage interest lowers it, because the debt costs less than its headline rate.
Why does the calculator ask about tax?
Because tax treatment often moves the break-even more than the difference between the two rates does. A 4% mortgage compared against a 7% expected return looks decisive until 20% tax on gains and no interest relief are applied. Both fields default to zero, which gives the simple pre-tax comparison.
Does it account for the risk of investing?
No. The expected return is applied as a steady rate every month, so the investing side never has a bad decade. Real returns arrive unevenly, and the order in which they arrive changes the outcome. Treat the investing figure as the midpoint of a wide range rather than a forecast.
What else does it leave out?
Prepayment penalties, rate changes at the end of a fixed period, product fees, the difficulty of accessing money once it is in a property, and any value placed on owing nothing. It also assumes the extra amount is genuinely available every month for the whole term.
See it against your real balances
Wealth Path tracks your mortgage and your investments together, and recalculates the comparison as balances and rates change — alongside 10 more predictions.
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The information and calculations provided are for informational and educational purposes only and should not be considered financial, investment, or professional advice. Projections are hypothetical, based on assumptions that may not reflect actual market conditions. Past performance does not guarantee future results, and all investments carry risk of loss. Consult a qualified financial professional before making financial decisions.