- Scenario range
- £174,946–£241,763
- Net mortgage-interest saving
- £63,479
- Mortgage-free
- 17 years
Compare · Calculator 10
Should you overpay your mortgage or invest?
Compare the contractual interest saving from mortgage overpayments with uncertain after-fee investment outcomes, including a split strategy.
1 Enter your figures2 Review assumptions3 Explore the result
Your figures
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Central scenario after 25 years
Invest leads by £15,950Compared with 50% overpay / 50% invest using a 6.0% gross return and the entered Stocks and Shares ISA assumptions.Contractual mortgage payment£1,390/moCalculated from the entered balance, rate and term
Net interest saving from overpaying£63,479£63,479 avoided before the entered charge
Break-even gross investment return4.9%Invest and overpay end values are equal
What the mortgage overpayment earns
4.5% interest avoidedThis is the contractual saving rate under the entered mortgage rate and terms, before any overpayment charge. Investment returns are uncertain.- Scenario range
- £155,378–£336,641
- Net mortgage-interest saving
- £38,306
- Mortgage-free
- 20 years and 3 months
- Scenario range
- £126,987–£452,136
- Net mortgage-interest saving
- £0
- Mortgage-free
- 25 years
Uncertain investment outcomes
How the strategies behave across the return range
50% overpay / 50% invest
- 2.0%
- £155,378
- 6.0%
- £217,623
- 10.0%
- £336,641
What changes the decision?
- Central comparison: the entered return becomes approximately 5.7% after the modelled annual fee, versus 4.5% mortgage interest.
- Downside scenario: at 2.0%, overpay mortgage finishes highest at £174,946.
- Liquidity: investments may be saleable, but their value can be down when the money is needed; mortgage overpayments usually cannot be withdrawn without new borrowing.
- Mortgage terms: overpayment limits, early-repayment charges and whether the lender shortens the term or reduces the payment can change the result.
Strategy comparison
End values after the original mortgage term. All strategies recycle cash released once the mortgage is repaid.
| Strategy | 2.0% return | 6.0% return | 10.0% return | Net interest saving | Mortgage-free |
|---|---|---|---|---|---|
| Overpay mortgage | £174,946 | £205,501 | £241,763 | £63,479 | 17 years |
| 50% overpay / 50% invest | £155,378 | £217,623 | £336,641 | £38,306 | 20 years and 3 months |
| Invest | £126,987 | £233,573 | £452,136 | £0 | 25 years |
Assumptions used
- The mortgage is a standard capital-and-interest repayment mortgage with a constant rate and monthly interest.
- The normal mortgage payment stays unchanged after overpayments, shortening the repayment period.
- Once the mortgage clears, the released normal payment and chosen extra amount are invested until the original term ends.
- Investment returns compound monthly after the entered annual fee.
- ISA eligibility, subscription limits and product charges are not checked.
The result is not a recommendation. Overpaying exchanges liquidity for a contractual saving; investing keeps market exposure and can finish above or below every displayed scenario.
Common questions
Mortgage overpayment vs investing FAQs
Is overpaying a mortgage a risk-free return?
An overpayment avoids mortgage interest under the lender’s contractual rate and terms. That saving does not depend on investment markets, but the amount can change if the mortgage rate changes, a charge applies or the lender changes how payments are recalculated.
What investment return needs to beat the mortgage rate?
The relevant comparison is the investment return after fees, tax and wrapper effects—not the headline market return. The calculator solves for the gross return at which the invest and overpay strategies produce the same end value under all entered assumptions.
Does the calculator allow for early-repayment charges?
It includes one user-entered charge taken from the lump-sum amount allocated to overpayment. Lender-specific annual overpayment limits, changing charge schedules and charges on regular monthly overpayments are not modelled.
Why does the overpay strategy still show an investment balance?
For a like-for-like comparison, the model invests the normal mortgage payment and extra cash released after the mortgage is repaid early. Otherwise the overpay strategy would be unfairly compared with an invest strategy that keeps deploying cash until the original mortgage end date.
Should I use an ISA, pension or general investment account?
Choose the wrapper that reflects where the investment would actually go. ISA contributions enter pound for pound without modelled tax. A general account uses your estimated annual tax drag. A pension uses your own contribution uplift and estimated share kept after withdrawal tax, while access restrictions and allowances remain outside the calculation.
What important factors are not included?
The model excludes changing mortgage rates, lender-specific daily interest, product fees, future remortgage rates, improved loan-to-value pricing, investment sequence risk, exact tax calculations and the personal value of liquidity and certainty.