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Overpay vs invest

Overpay the mortgage or invest?

The after-tax return an investment needs to beat the mortgage rate.

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What you enter: mortgage interest rate % · expected investment return % a year · tax rate on the returns % · years · amount a year.

Worked example

Overpay the mortgage or invest — an example

Inputs
Mortgage interest rate %
4.5%
Expected investment return % a year
6%
Tax rate on the returns %
20%
Years
15
Amount a year
£5,000
Result
Investment return needed to match overpaying
5.6%
Investing, after 15 years
£111,384
Overpaying, interest saved and capital
£108,597
Better on these numbers
invest

Inside an ISA or pension the tax rate on returns is 0; overpaying is a guaranteed return, investing is not.

How it is worked out. Each year's amount either reduces debt charged at the mortgage rate or grows at the expected return net of tax; the two totals are compared.

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Not advice. Money Horizon is a planning indicator built on simplified rules. It does not know your full circumstances, cannot replace a regulated adviser, and its figures should not be relied on for any decision. It is not financial advice. Nothing you enter leaves your browser. Calculators use the 2026-27 rules; figures are estimates.