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Mortgage payoff vs invest calculator
Paying down the mortgage earns a guaranteed return equal to your loan rate, while investing the same money earns an uncertain one. This compares the two paths over a horizon you pick, finds the investment return where they break even, and keeps the certainty difference in view, since a guaranteed return and an expected one are not the same even when the numbers match.
Background reading: Big lifestyle decisions
Under these assumptions, paying down the mortgage ends ahead
$15,882
Paying down the mortgage ends the 15-year horizon ahead by this much under the stated assumptions. The break-even expected return is 6.0%.
Hypothetical illustration. These figures are illustrations under the assumptions you set, not guarantees. The mortgage payoff earns a guaranteed return equal to the loan rate, while the investing return is uncertain, so two equal numbers are not equally certain.
Guaranteed return (the loan rate)6.0%
Assumed investment return (uncertain)5.0%
Payoff path ending value (guaranteed)$119,828
Investing path ending value (uncertain)$103,946
Break-even expected return6.0%
Difference (investing minus payoff)-$15,882
Where this goes next
This shows the comparison and breakeven under assumptions; it does not tell you to pay off or invest. That is a conversation with a CFP.
Assumptions and simplifications
- This is a hypothetical illustration; investment results are not guaranteed.
- Paying down the mortgage is a certain return equal to the after-tax mortgage rate; investing the same dollars earns an uncertain return at the assumed rate.
- It compounds the same dollars at each rate over the horizon; it simplifies amortization, taxes on the investment, and mortgage-interest deductibility (which defaults to none for high earners given the SALT cap and standard deduction).
- Markets can underperform the assumption, so investing is the riskier path even when it wins on the numbers.