Mortgage Overpay vs Invest Calculator
Compares the interest you save by overpaying a mortgage each month with what the same money would grow to if you invested it instead.
Recent
Formula
How the calculation works
Enter the extra amount you could pay towards the mortgage each month and the annual interest rate your loan charges.
Enter the annual return you realistically expect from investing and the number of years you would keep both going.
The tool works out the simple interest saved on the loan and the compound growth of the same monthly money invested, then subtracts one from the other.
Common mistakes
- Comparing a guaranteed loan rate with a best-case investment return, since a market return is not certain while the interest saved always is.
- Forgetting tax on investment gains, which lowers the investment value and can shrink or remove the advantage shown here.
When to use it
- Use it when you have spare cash each month and cannot decide whether to clear the mortgage faster or invest the money.
- Use it to see the turning point, since investing wins only while the return beats the mortgage rate by a clear margin.
Worked example
Overpaying 10000 Taka a month on a 9 percent loan for 10 years saves about 1080000 Taka in interest, while the same money invested at 12 percent grows to about 2300390 Taka, an advantage of about 1220390 Taka to investing.
Common questions
Does the mortgage saving use simple or compound interest?
It uses a simple estimate of the interest saved, so the real figure depends on your remaining term and balance, and the comparison is best treated as a guide rather than an exact result.
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