Pay off your mortgage faster or invest the extra cash?

What the calculator compares

The calculator shows three paths: regular mortgage payments, regular payments plus extra principal, and regular payments while investing that extra cash in a separate fund. The extra amount goes to one alternative at a time. It is never counted in both.

Start with the mortgage balance today and the fixed interest rate. Enter your regular monthly principal-and-interest payment, or calculate it from the original loan amount and term. Escrow is separate from principal and interest.

The philosophy: compare choices on equal terms

Paying down principal reduces the balance on which mortgage interest is charged. An investment fund may grow faster under a selected return assumption, but that growth is uncertain. A comparison is useful only when it shows both the timing and the different risks.

The point is to make the tradeoff visible. An earlier projected crossover is one piece of the decision. Access to cash, comfort with debt, and the ability to stay invested through losses also matter, and the chart does not assign those priorities for you.

Read the three lines and two different milestones

The gray line is the standard mortgage balance. Brown shows the balance with extra principal. Green shows the investment fund. Where the fund first reaches the regular mortgage balance, the modeled fund could pay off the loan.

The payment-covered milestone asks a different question: when would one month of projected fund growth match the regular mortgage payment? That is a comparison at the assumed rate, not a guaranteed payment stream or an actual payoff.

The green line continues to show the alternative of keeping the fund invested, making regular mortgage payments, and continuing contributions. If you spend the fund to clear the mortgage at the crossover, you cannot also retain that same money for the later green-line value.

Try these comparisons

First set extra monthly cash and the current investment balance to $0. With no fund to grow and no extra principal, there is no acceleration. Next add $300 a month and compare the dates. Set the investment return to 0% to see how deposits alone compare with principal reduction.

Finally enter an existing $20,000 fund. The extra-principal path applies that amount to the mortgage immediately; the investment path keeps it invested. Those are alternative uses of the same starting money.

What the model leaves out

The model supports fixed-rate monthly principal-and-interest amortization. It does not include taxes, investment fees, withdrawal costs, escrow, insurance, adjustable rates, or prepayment penalties. It uses the annual investment assumption divided by 12 for monthly growth. Check your loan terms and payment allocation before acting on a scenario.