COMPARISON · MONEY · MORTGAGE
At the defaults — $300,000 at 6.9% with 28 years left, $500/mo extra, 7% market return — paying down the mortgage wins by $159,862: $171,198 of interest erased and 11 years 2 months shaved off. Change the rate and the winner flips — enter your numbers and see both sides fairly.
Both paths spend the same monthly dollars — the scheduled payment plus the extra — so the dollar gap at the end of your original loan term is a fair verdict. The calculator prepays, then invests the freed payment; or invests the extra the whole time.
Payoff wins by $159,862 at the defaults. Extra payments earn a guaranteed 6.9%; the market offers an expected 7% that isn’t guaranteed. The rule of thumb: compare your mortgage rate to the market return you actually believe in — a high rate makes prepaying nearly unbeatable, a low rate makes investing the obvious call. And take the 401(k) match first, always: free money beats both paths.
Setup: $300,000 balance, 6.9% APR, 28 years left, $500/mo extra, 7% market return.
Line 1 — the standard payment. $300,000 × 0.00575 ÷ (1 − 1.00575−336) = $2,019.11/mo. This is the scheduled bill with no extras.
Line 2 — baseline interest. $2,019.11 × 336 − $300,000 = $378,419.98 of lifetime interest if you never pay extra.
Line 3 — the payoff path. Paying $2,519.11/mo kills the loan in 202 months (16y 10m); total interest falls to $207,221.58, so $171,198.40 of interest is erased and 134 months (11y 2m) are shaved off. Then the freed $2,519.11/mo is invested for the remaining 134 months at 7%: $509,645.99.
Line 4 — the invest path. $500/mo invested at 7% for the full 336 months grows to $519,344.11 — but the mortgage still costs the full $378,419.98 in interest.
The verdict. Same monthly dollars both ways. Payoff path nets +$786; invest path nets −$159,076. Paying off wins by $159,862 — the guaranteed 6.9% edges out a 7% expectation.
| Output | Formula | What it means |
|---|---|---|
| Standard payment | P · r ÷ (1 − (1+r)−n) | $2,019.11/mo at the defaults — the scheduled bill before any extras. |
| Interest saved | baseline interest − extra-path interest | $171,198.40 erased — every extra dollar deletes its whole future interest stream. |
| Time shaved | (336 − 202) ÷ 12 | 11 years 2 months — debt-free in 16y 10m instead of 28 years. |
| Invest-path balance | $500/mo @ 7% × 336 mo | $519,344.11 — but the full $378,419.98 of mortgage interest is still paid. |
| Payoff-then-invest | $2,519.11/mo @ 7% × 134 mo | $509,645.99 — the freed payment compounds for the remaining term. |
| Net winner | net payoff − net invest | Payoff by $159,862 — the gap both paths spend identically, so it’s a fair verdict. |
The mortgage math is exact amortization — real loan math, not estimates. The investment side is modeled as a smooth 7% compounded monthly; real markets are volatile, and sequence of returns matters: a crash early hurts the invest path far more than a smooth model shows. The comparison ignores taxes (the mortgage-interest deduction, if you itemize), PMI effects, prepayment penalties (rare on qualified mortgages), and inflation. Both paths are modeled pre-tax. Liquidity is the biggest unmodeled cost: extra principal is trapped until you sell or refinance. Not financial advice — run your own numbers, then talk to a fiduciary.
Bright Side Kit. "Pay Off Mortgage vs Invest: Calculator & 2026 Verdict." https://brightoolbox.com/pay-off-mortgage-vs-invest/ Accessed October 24, 2026.Data sourcesEvery extra dollar earns exactly your mortgage rate, risk-free. Pay $500 extra on a 6.9% loan and you permanently delete all the future 6.9% interest that $500 would have accrued — no market needed, no luck required. That’s why prepaying a high-rate loan is one of the best risk-free returns available to ordinary households.
Because the two returns live in different worlds. The mortgage rate is a contract; the market return is an expectation with a wide range — stocks have had negative decades. At 3% the market’s expectation wins comfortably; at 8% the guarantee wins comfortably; at 6.9% vs 7% it’s close enough that risk tolerance and liquidity decide, not math.
Not easily. Extra principal is equity, and equity is illiquid — reaching it means selling the home, refinancing, or opening a HELOC, all slow and sometimes costly. Never prepay while your emergency fund is thin or while carrying higher-rate debt. Liquidity is the payoff path’s biggest hidden cost.
Yes — always. A typical 50% employer match turns your $500/mo into $750/mo instantly: $3,000/yr of free money. No prepayment math and no market return can beat an instant 50% return. Fund the match first, then run this calculator with what’s left.
Slightly, if you itemize. Deducting interest at a 24% marginal rate turns a 6.9% mortgage into an effective ~5.24% after-tax cost — which weakens the payoff case. But since the standard deduction rose, most borrowers don’t itemize, and the deduction only applies to interest you actually pay (prepaying erases the interest and the deduction together).
7% is a common long-run assumption for a stock-heavy portfolio after inflation — but it’s an average across decades, not a promise for your decade. If you’d invest conservatively (bonds, savings), use 4–5% instead, and watch the payoff path win by even more. Be honest about what you’d actually invest in.
Yes — short horizons shrink the gap. Over 7 years the defaults produce a statistical tie (within $200): $53,799 of extra equity vs a $53,999 investment account. And when you sell, extra equity comes back to you — but only at closing. For short stays, keep the cash liquid unless the rate is very high.