Pay Off Your Mortgage Early or Invest? Calculator
Extra mortgage payments cut your interest and help you own your home sooner. Investing that money could grow more, or less. Enter your numbers and see both paths side by side.
Your mortgage
We filled in sample numbers. Swap in your own.
How the math works
We start with your regular monthly principal and interest. Then we add your extra payment to see how soon the loan ends and how much interest you save.
Next, we picture the same extra money going into an investment instead. Both plans are measured on the same day: the day your loan would end with normal payments. If you pay the loan off early, we assume you invest your full old payment each month until then.
Extra payments "earn" your mortgage rate for sure. Investing could earn more or less, and it can lose money. Taxes, fees, and the mortgage interest deduction are not counted.
A worked example
Take a $200,000 loan at 6% for 30 years. The payment is $1,199.10 a month. Add $100 extra each month, and the loan ends in 295 months (about 24 years and 7 months). That is 65 months early, and you save about $49,138 in interest.
Common questions
Should I pay off my mortgage or invest?
It depends on you. Extra payments save interest at your mortgage rate, and that is certain. Investing may earn more, but it can also go down. Many people build an emergency fund first.
How much can extra payments save?
It depends on your balance, rate, and extra amount. For example, $100 more a month on a $200,000 loan at 6% for 30 years saves about $49,138 and ends the loan about 5 years and 5 months early.
Does one big extra payment help?
Yes. It lowers your balance right away, so less interest adds up after that. Ask your servicer to apply it to principal.
Will extra payments lower my monthly bill?
Usually not. Most loans keep the same payment and end sooner. Some servicers can "recast" your loan after a big payment to lower it, often for a fee.
Is there a fee for paying off early?
Most home loans today have no prepayment penalty, but some do. Check your loan papers or ask your servicer first.
Want to own your home sooner?
Extra payments are one way. A lower rate or a shorter loan could help too. Mark can look at your real numbers.
Estimates only. Not a loan offer. These numbers come from simple math and what you type in. They are not a pre-approval, a rate quote, or a promise to lend. Your real rate, payment, and costs depend on your credit, income, home, loan type, and more. Not everyone will qualify. This is not investment or tax advice. Investment returns are not guaranteed. Mark Jost, Mortgage Loan Originator, NMLS #150914. Heathrow Mortgage, Company NMLS #1849599. Equal Housing Opportunity.