Example 1
What if I have $500 extra each month?
$500 each month for 10 years = $60,000 of extra money. Both choices use the same extra amount.
Choice 1: Pay the mortgage faster
Add $500 to your normal mortgage payment each month. It goes toward the loan, not into investments.
- Mortgage still owed after 10 years
- $147,116
- Mortgage interest saved during those 10 years
- $21,940
The interest saving is already reflected in the lower mortgage balance. We do not add it a second time.
Choice 2: Invest the extra money
Keep your normal mortgage payment and invest $500 at the end of each month instead.
- Estimated investment value after 10 years
- $85,526
- Mortgage still owed after 10 years
- $229,056
You invest $60,000. The remaining $25,526 is estimated investment growth, not guaranteed interest.
Investing finishes about $3,586 ahead in this example.
After 10 years, investing leaves $85,526 in the investment account, but $81,940 more mortgage debt than paying extra. Compare those two amounts to see the difference. Lower investment returns or added costs can change which choice is ahead.
Show the simple calculation
Mortgage interest saved: $161,004 with normal payments − $139,065 with extra payments ≈ $21,940.
Extra mortgage debt if you invest: $229,056 − $147,116 ≈ $81,940.
Difference between the choices: $85,526 investments − $81,940 extra debt ≈ $3,586 in favor of investing under these assumptions.
Both examples still have a mortgage at year 10, so neither includes cash released after payoff. Home value is the same in both choices and is not added to the comparison. Dollars are rounded; the calculator uses unrounded amounts.
Each month, mortgage interest is the remaining balance × 6% ÷ 12. The rest of the payment reduces principal. Investment growth uses a monthly rate equivalent to 7% over a full year; monthly deposits are added after that month's growth.