# Overpay your mortgage or invest?

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Enter your loan and your spare money. The calculator plays out both paths month by month — the same money, two strategies — and shows which one leaves you wealthier at the end of your current loan term.

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## Overpaying vs investing — how to compare them fairly

Most articles answer this question with opinions. The honest answer is arithmetic. Overpaying your mortgage is a guaranteed saving: every extra unit of currency stops accruing interest at your loan rate, tax-free. Investing the same money can earn more — or less — and gains are usually taxed. To compare fairly, both scenarios here spend exactly the same amount every month. In the overpayment scenario the loan ends early, and from that month the whole freed-up installment is invested too. At the end of your original loan term both paths hold the same repaid home plus an investment pot, so the difference between them is real. The key number is the break-even return: above it investing wins, below it overpaying wins. It usually sits close to your loan rate — higher once you account for tax on investment gains.

## Frequently asked questions

### Is overpaying a mortgage worth it?

Often yes, but it depends on one comparison: your loan rate versus what your money could earn elsewhere after tax. Overpaying gives you a guaranteed, tax-free saving equal to your loan rate. If your realistic after-tax investment return is higher, investing wins mathematically — with risk attached. This calculator computes the exact threshold for your numbers.

### What decides which option wins?

Almost everything reduces to the break-even return: the annual investment return at which both paths end with the same wealth. Without tax it sits near your loan interest rate. With tax on investment gains it moves higher, because investing has to out-earn a tax bill the overpayment never pays. The calculator shows your break-even under the verdict.

### Overpay the mortgage or buy bonds / keep a savings account?

Run it in the calculator: enter the bond or deposit rate as your expected return. After tax, safe investments rarely beat the loan rate, so overpaying usually wins on pure numbers. Bonds and deposits keep one big advantage though — the money stays accessible, while an overpayment is locked into the property.

### Shorten the loan term or lower the installment?

This calculator models shortening the term: you keep paying the same installment and the extra money cuts the principal, which saves the most interest. Lowering the installment instead reduces your monthly outlay but saves less interest overall — and it would make the two scenarios spend different amounts, breaking a fair comparison.

### Does the calculator account for tax?

Yes — an optional capital-gains tax on investment profits, applied when the comparison ends. Mortgage overpayment is not taxed, which is a quiet part of its edge. If you invest through a tax-advantaged retirement account, set the rate to 0% in advanced options.

### Equal or decreasing installments — does it change the result?

Pick your installment type in the form — the comparison logic is the same for both. With decreasing installments you repay principal faster, so there is less interest to save and overpaying gains slightly less than with equal installments. The verdict always reflects the type you selected.

*This calculator provides simplified estimates for educational purposes only and is not financial advice. Real loans and investment returns will differ. Consult a qualified financial advisor before making decisions.*