Pay off mortgage vs. invest

This pay off mortgage vs. invest calculator compares two uses for the same amount of money: paying down your mortgage early, or investing it instead, based on your mortgage rate, years and expected investment return.

A guaranteed return vs. a probable one

Paying off your mortgage early is equivalent to earning a guaranteed, risk-free return equal to your mortgage rate — every euro you pay down is a euro of interest you’ll never owe. Investing that same money can earn more if markets perform well, but the return isn’t guaranteed and can also come in lower, especially over shorter time horizons.

Example

With €20,000 available, a 15-year horizon, a 3% mortgage rate and a 6% expected investment return: investing grows that money to roughly €47,930, while paying off the mortgage is worth about €31,160 in avoided interest — investing wins by around €16,770 in this scenario, assuming the return holds for the full period.

For guidance only, not financial advice — the right choice also depends on your risk tolerance and financial situation.

FAQ

Is paying off a mortgage early always the safe choice?

Paying off debt guarantees a return equal to your mortgage rate, with no risk. Investing can return more over time, but the outcome isn't guaranteed and markets can drop, especially over shorter periods.

What return rate should I use for investing?

A common reference is the long-term historical average for a diversified stock portfolio (around 6-7% a year before inflation), but actual returns vary a lot year to year and aren't guaranteed.

Does this account for taxes or the peace of mind of being debt-free?

No — it only compares the two numbers. Being mortgage-free has value beyond the math (lower monthly obligations, less risk if income drops), and taxes on investment gains aren't factored in either.