Extra Mortgage Payment vs Invest Calculator

About this calculator

This calculator compares two ways to use extra cash: paying it toward your mortgage principal early, versus investing it in the market. Paying down the mortgage delivers a guaranteed, risk-free return equal to your after-tax mortgage rate — every extra dollar of principal saves you that rate in interest for as long as the loan would otherwise have run. Investing the same dollar instead exposes it to market risk but taps into the historically higher long-term return of stocks or index funds, reduced by any capital gains tax owed when you eventually sell.

Homeowners face this decision constantly — after a raise, a bonus, or simply when deciding what to do with monthly surplus cash — and the right answer depends heavily on the interest rate spread between the mortgage and expected investment returns, whether mortgage interest is tax-deductible for that borrower, and how much risk tolerance they have for a fluctuating portfolio versus the certainty of a lower loan balance.

This calculator takes your extra payment amount, mortgage interest rate, and expected investment return, applies the relevant deductions and taxes, and shows which option leaves you further ahead financially.