Invest or Pay Down the Mortgage?
Money sent to principal earns your mortgage rate, guaranteed. Money invested might earn more or might not. This page prices both on your figures and your own return assumption.
Private by design. Your numbers stay on this device.
Educational estimates only. Not financial, tax, or lending advice.
Updated
Should you invest the money or pay down the mortgage?
Paying down a mortgage is a risk-free return equal to your interest rate. Investing is not risk-free, so a fair comparison needs a return you would expect after fees and tax, rather than the number that gives the answer you were hoping for. The assumed return below starts at zero on purpose, because a plausible-looking default would let the least certain figure in the calculation decide the result for anyone who never touched the field.
- Add an assumed investment return to compare.
Over your 26-year stay
The assumed return starts at 0%, which makes investing identical to keeping your mortgage. Nothing here decides the answer until you enter a return you believe.
- Keep current
- Monthly payment
- $2,767
- Net cost over your stay
- $687,691
- vs keeping your mortgage
- —
- Break-even, ours
- —
- Break-even, conventional
- —
- Extra payments
- Monthly payment
- $2,967
- Net cost over your stay
- $605,112
- vs keeping your mortgage
- +$82,579
- Break-even, ours
- Ahead from month 1
- Break-even, conventional
- Nothing upfront to recover
Why two break-even figures? The conventional figure counts only the monthly payment saving against the cash you pay upfront. Ours also counts what you still owe when you sell, which is why the two disagree.
Compared over
the 26 years you expect to stay
Two break-even figures. The conventional figure counts only the monthly payment saving against the cash you pay upfront. Ours also counts what you still owe when you sell, which is why the two disagree.
| Leave it alone | Change your current loan | |
|---|---|---|
| Measure | Keep current | Extra payments |
| Interest rateThe rate on the new or largest loan in this scenario. | 6.875% | 6.875% |
| Starting loan balance | $320,000Low | $320,000Low |
| Starting LTV (loan-to-value) | 71.1% | 71.1% |
| Principal & interest | $2,204Low | $2,204Low |
| Extra principalVoluntary principal on top of the scheduled payment. Part of what you pay each month, so it belongs in the all-in figure. | — | $200 |
| PMI | — | — |
| Property tax + insuranceIdentical across every scenario for the same home, but a real part of the monthly bill. | $563 | $563 |
| Monthly HOA dues | — | — |
| All-in monthly payment | $2,767Low | $2,967 |
| Total closing costs | NoneLow | NoneLow |
| Cash you have to put inClosing costs paid in cash, plus any lump sum or one-time payment this option needs upfront. | NoneLow | NoneLow |
| Monthly commitment on topMoney you have to keep finding every month beyond the required payment: voluntary extra principal, or the same money invested instead. The required payment itself is the all-in figure above. | NoneLow | $200/mo |
| Cash received | None | None |
| Interest over 26 years | $367,691 | $285,112Low |
| Balance left after 26 yearsWhat you would still owe when you expect to sell or refinance again. | $0Low | $0Low |
| Equity after 26 yearsHome value less the balance owed. Uses your assumed appreciation rate, which is 0% unless you change it. It is never used to remove mortgage insurance early. | $450,000Low | $450,000Low |
| Invested balance after 26 yearsOnly the growth on this account is credited against net cost. The contributions are money you paid in, so counting the whole balance would count them twice. | — | — |
| Net cost over your planned stayCash closing costs + payments made + balance still owed − cash received. Excludes property tax, insurance and HOA, which are identical across scenarios. | $687,691 | $605,112Low |
| Savings vs keeping your mortgageThis is not the same as interest saved: it also counts the balance you still owe at the end of your stay and any cash you paid upfront. The row above reconciles the two. | Baseline | +$82,579Low |
| Why that differs from interest saved | — | They agree. |
| Break-even point, ours“Ahead from month 1” means there was no upfront cost to recover. “Never recovers” means the costs are never paid back. | — | Ahead from month 1 |
| Break-even point, conventionalUpfront cash divided by the monthly payment saving. This is the number most people mean by break-even, and it flatters a refinance: it ignores the principal you stop paying down when the term restarts. The equity-adjusted figure above is the one to rank on. | — | Nothing upfront to recover |
| Time to payoff | 26 years | 21 yearsLow |
| Total interest, full term | $367,691 | $285,112Low |
| Lifetime cost (interest + costs) | $367,691 | $285,112Low |
How to read this: “Low” marks the lowest figure among the scenarios shown and is not a recommendation. Net cost counts payments made plus the balance still owed at the end of your stay, minus cash received, which is what makes loans of different sizes and terms comparable.
Full amortization schedule
Every payment, month by month: how much goes to interest, how much retires principal, and what you still owe afterwards. The last money column is the all-in cost (principal, interest, any extra you send, mortgage insurance, property tax, homeowners insurance and HOA dues), which is what leaves your account. Switch to the annual view for a year-by-year summary. Printing and the CSV both follow whichever view you are in, so a year-by-year download gives a year-by-year file, which opens in Excel, Google Sheets and Numbers.
| Month | Payment date | Beginning balance | Payment | Principal | Interest | Extra principal | Ending balance | Cumulative interest | Mortgage insurance | Taxes & insurance | HOA | Total monthly cost | LTV |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Jan 01, 2026 | $320,000.00 | $2,204.15 | $370.82 | $1,833.33 | — | $319,629.18 | $1,833.33 | — | $562.50 | — | $2,766.65 | 71.0% |
| 2 | Feb 01, 2026 | $319,629.18 | $2,204.15 | $372.94 | $1,831.21 | — | $319,256.24 | $3,664.54 | — | $562.50 | — | $2,766.65 | 71.0% |
| 3 | Mar 01, 2026 | $319,256.24 | $2,204.15 | $375.08 | $1,829.07 | — | $318,881.16 | $5,493.61 | — | $562.50 | — | $2,766.65 | 70.9% |
| 4 | Apr 01, 2026 | $318,881.16 | $2,204.15 | $377.23 | $1,826.92 | — | $318,503.93 | $7,320.53 | — | $562.50 | — | $2,766.65 | 70.8% |
| 5 | May 01, 2026 | $318,503.93 | $2,204.15 | $379.39 | $1,824.76 | — | $318,124.54 | $9,145.29 | — | $562.50 | — | $2,766.65 | 70.7% |
| 6 | Jun 01, 2026 | $318,124.54 | $2,204.15 | $381.56 | $1,822.59 | — | $317,742.98 | $10,967.88 | — | $562.50 | — | $2,766.65 | 70.6% |
| 7 | Jul 01, 2026 | $317,742.98 | $2,204.15 | $383.75 | $1,820.40 | — | $317,359.23 | $12,788.28 | — | $562.50 | — | $2,766.65 | 70.5% |
| 8 | Aug 01, 2026 | $317,359.23 | $2,204.15 | $385.95 | $1,818.20 | — | $316,973.28 | $14,606.48 | — | $562.50 | — | $2,766.65 | 70.4% |
| 9 | Sep 01, 2026 | $316,973.28 | $2,204.15 | $388.16 | $1,815.99 | — | $316,585.12 | $16,422.47 | — | $562.50 | — | $2,766.65 | 70.3% |
| 10 | Oct 01, 2026 | $316,585.12 | $2,204.15 | $390.38 | $1,813.77 | — | $316,194.74 | $18,236.24 | — | $562.50 | — | $2,766.65 | 70.3% |
| 11 | Nov 01, 2026 | $316,194.74 | $2,204.15 | $392.62 | $1,811.53 | — | $315,802.12 | $20,047.77 | — | $562.50 | — | $2,766.65 | 70.2% |
| 12 | Dec 01, 2026 | $315,802.12 | $2,204.15 | $394.87 | $1,809.28 | — | $315,407.25 | $21,857.05 | — | $562.50 | — | $2,766.65 | 70.1% |
Showing 1–12 of 312 payments
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Educational estimates only. Not financial, tax, or lending advice. Want every option side by side instead? Open the full comparison.
The break-even return is your mortgage rate
The two paths finish exactly level at that rate, and the engine gets there without being told to.
Money sent to principal earns precisely the rate you are being charged, so the question has a clean answer: investing wins above that rate and loses below it. On a 6.5% mortgage with $500 a month spare over 10 years, here is the comparison bracketed on both sides.
| Assumed return | Extra principal | Invest instead | Ahead |
|---|---|---|---|
| 4% | $24,202 | $13,625 | Extra principal |
| 5% | $24,202 | $17,641 | Extra principal |
| 6.5% | $24,202 | $24,202 | Level |
| 7% | $24,202 | $26,542 | Investing |
| 8% | $24,202 | $31,473 | Investing |
Both figures are the position against doing neither, at the end of the horizon. Computed by the same engine as the calculator above and re-checked against it on every build.
At 6.5% the two paths finish level to the dollar, at $24,202 either way. Nothing was tuned to get that result: it follows from costing both sides on the same basis, and it is good evidence that the comparison is fair. Any calculator whose break-even lands somewhere other than your mortgage rate is measuring the two options differently.
That leaves one judgement: are you confident of clearing 6.5% after fees and tax, over this horizon, with money you cannot easily get back either way? Only you can answer that, so this page doesn’t try.
What the arithmetic leaves out
Three things the comparison above cannot see, all of which can move the answer.
- Tax cuts both ways. Investment gains may be taxed on realization, lowering the effective return; mortgage interest may be deductible for those who itemize, lowering the effective cost of the debt. Enter an after-tax return you expect rather than a headline one.
- Liquidity. Money paid to principal is locked in the house until you sell, refinance or borrow against it, and on most loans paying ahead does not reduce next month’s required payment. An investment account and a paid-down mortgage behave differently, however similar the arithmetic looks.
- Sequence. The table assumes one steady return. Real returns arrive unevenly, and a poor decade early does more damage than the average suggests. The mortgage rate, by contrast, is the one number in this comparison that is contractual.
A recast is also relevant here: it turns a lump sum into a lower required payment without giving up your rate, which extra principal alone will not do.
Invest vs extra payments questions
- What return does an investment need to beat paying down the mortgage?
- Exactly your mortgage rate. Money sent to principal earns precisely the rate you are being charged, so at an assumed return equal to that rate the two paths finish level to the dollar. On a 6.5% mortgage with $500 a month spare over ten years, both come out $24,202 ahead of doing neither. Below 6.5% the extra payment wins, above it the investment does, and the decision comes down to how confident you are in the return you assumed.
- Why does the assumed return start at zero?
- Because a plausible-looking default would decide the answer for anyone who never touched the field, and it would be the least certain number in the calculation doing it. Every other input here is a fact you can read off a statement. The expected return is a forecast, and a calculator that pre-fills 7% is arguing for a conclusion and hiding the argument in a default rather than modelling your situation.
- Does this comparison account for tax?
- No, and the omission cuts both ways. Investment returns may be taxed on realization, which lowers the effective return, while mortgage interest may be deductible for those who itemize, which lowers the effective cost of the debt. Both depend on circumstances this calculator cannot see. Enter an after-tax return you expect rather than a headline one.
- Is paying down a mortgage really risk-free?
- The return is certain in a way an investment return is not, because you know the rate. What you give up is access: money paid to principal is locked in the house until you sell, refinance or take a new loan against it, and paying ahead does not reduce next month's required payment on most loans. An emergency fund and a paid-down mortgage are not substitutes for each other, however similar the arithmetic looks.