Compare the financial outcome of overpaying your mortgage against investing the same amount — over the same total time period.
* Both scenarios are compared over the same total time period (the original mortgage term). In Scenario B, once the mortgage is paid off early, the full monthly mortgage payment plus the extra amount is invested for the remaining months. Investment growth is assumed to be free of UK tax, i.e. held in a Stocks and Shares ISA. Outside an ISA, dividends and capital gains may be taxable, which would reduce the investment figures shown. Contributions are also assumed to stay within the annual ISA allowance — note that in Scenario B the amount invested after the mortgage is cleared is much larger than the monthly extra, so check it against the allowance. Contributions are assumed to be made at the start of each month and mortgage payments at the end, which is how the money actually moves. Investment returns are compounded monthly at the stated annual rate, on the same basis as the mortgage rate, so the two are directly comparable. Net wealth = investment pot minus remaining mortgage balance. Both scenarios pay out exactly the same amount of cash each month for the same number of months, and both end with the mortgage cleared, so final net wealth is a like-for-like comparison. The interest saved by overpaying is shown separately for information — it is already reflected in Scenario B’s net wealth and should not be added to it. This calculator is for illustrative purposes only and does not constitute financial advice. Past investment performance is not a guide to future returns.