Mortgage Overpayment vs Investing Calculator

Overpaying your mortgage earns a guaranteed, tax-free return equal to your mortgage rate. ETFs usually earn more, but not every time. This calculator finds the ETF return you need to beat overpaying, then runs your plan through 1,000 simulated markets to show how often you would.

Enter your mortgage, the amount you could put aside each month, and the account you would invest through. The result shows who comes out ahead, by how much, and how sure that is.

Cite or embed this: Mortgage Overpayment vs Investing Calculator, Portofelo. Source: Your own rates and assumptions. Last updated 9 October 2026.

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<p><a href="https://portofelo.com/tools/mortgage-overpayment-vs-investing-calculator">Mortgage Overpayment vs Investing Calculator</a> by <a href="https://portofelo.com">Portofelo</a></p>

How the comparison works

Both plans spend exactly the same money each month, so neither gets an unfair head start. The overpaying plan pays the extra into the mortgage. When the mortgage clears early, it puts the whole monthly amount into ETFs until the original end date. The investing plan pays the mortgage as scheduled and invests the extra from the first month.

Both plans are judged on the original end date, when neither owes anything, by what the ETFs would be worth if sold, after tax. That gives one number to compare, rather than "interest saved" on one side and "growth" on the other.

Your break-even rate

Overpaying wins whenever your mortgage rate is higher than the return ETFs actually earn after fees and tax. In a tax-free account, the break-even is roughly your mortgage rate plus your fees. On a 4% mortgage with 0.3% fees it is 4.37% a year; the extra 0.07% comes from mortgage interest compounding monthly.

In a taxable account, tax on dividends and gains pushes the break-even higher: to about 5.2% at 20% tax in the same example. That is why using a tax-free allowance first matters more than which ETF you pick.

Why the answer is a probability

A single expected return hides the risk. Over 25 years, a global tracker with typical volatility can finish far above or below its average, and the order of good and bad years matters. The "1,000 markets" chart runs your plan through 1,000 random paths with the same average return. In the default example investing wins in about 70% of them. In a bad market (1 year in 10), it trails overpaying by about €27,000.

If losing that bet would keep you up at night, the certain saving from overpaying is worth more to you than the expected gain. That is a legitimate reason to overpay, not a mistake.

Early repayment fees

Many lenders, especially on fixed-rate loans, let you repay around 10% of the balance a year without a fee. Above that, the fee depends on your contract and on national rules; in the EU, the Mortgage Credit Directive caps it at the lender's actual loss. Monthly overpayments rarely reach the limit early on, but a lump sum can, and the allowance shrinks as the balance does. The calculator flags the first year your overpayments go over 10%.

Fixed or variable changes the answer

On a fixed rate, the return on overpaying is locked until the fixed period ends. On a variable rate, it moves with the central bank's rate. The calculator holds one rate for the whole term, so if your fixed period ends soon, run it again with the rate you expect next. Overpaying also lowers your loan-to-value, and moving below 75% or 60% often unlocks a cheaper rate. The calculator shows when you would reach each band but does not count that saving in either plan.

What to do before either

Clear expensive debt first; a credit card at 20% beats any mortgage decision (see how to pay off debt fast). Keep an emergency fund in cash, because money paid into a mortgage is hard to get back out. Take any employer pension match. After that, compare your mortgage rate with your break-even, or split the money between the two.

Frequently asked questions