⚖️ Pay Off the Mortgage or Invest?
You have spare money each month. Both paths compared on the only measure that matters — net worth at the same date, counting the mortgage still owing.
Your mortgage
Remaining amortization
The money you’re deciding about
What you could either prepay or invest
Long-run average for a diversified portfolio is often assumed at 5–7%
Investing comes out ahead by about $34,298
Over 22 years, putting the money in the market leaves you with more net worth than throwing it at the mortgage — assuming you actually earn 6%.
The number that decides it
You need to earn about 4.6% a year for investing to beat prepaying. You entered 6.0%.
Prepaying earns you a guaranteed 4.50%, tax-free, with zero risk. Investing is expected to earn 6.00% after tax — but that is an average with real volatility around it, not a promise.
Pay down the mortgage
$235,520
net worth after 22 years
- Investments
- $235,520
- Mortgage left
- $0
- Interest paid
- $163,554
- Mortgage-free in
- 16.3 yrs
Invest instead
Ahead$269,819
net worth after 22 years
- Investments
- $269,819
- Mortgage left
- $0
- Interest paid
- $228,421
- Mortgage-free in
- 22.0 yrs
Net worth compared
The house is worth the same in both scenarios, so it cancels out and is left off. Bars below zero are mortgage still owing.
Before you decide on the number alone
- Do the obvious things first. Capture every dollar of employer RRSP match, clear any credit card or high-interest debt, and build an emergency fund. All three beat both options here.
- Prepaying is guaranteed. Investing is not. The spreadsheet compares an average return to a certain one. A 6% expected return includes years of −20%. If a market drop would make you panic-sell, the mortgage is the better home for the money.
- Money in the mortgage is hard to get back. Once prepaid, accessing it means a HELOC or a refinance, and lenders are least willing to help exactly when you most need it. Investments stay liquid.
- Check your prepayment privileges. Most Canadian mortgages allow 10% to 20% of the original principal per year without penalty. Exceeding it triggers a charge that can wipe out the benefit. At this rate, prepaying clears the mortgage about 5.7 years sooner and saves $64,866 in interest.
- Splitting is allowed. Half to each is a perfectly sensible answer, and for most households the difference between the two paths is smaller than the difference between doing something and doing nothing.
Uses semi-annual compounding, the Canadian mortgage standard. Both paths assume the same total monthly cash commitment, with the regular payment redirected to investing once the mortgage clears in either scenario. Assumes a steady return rather than real market volatility, constant tax rates, and no TFSA or RRSP contribution room limits. Estimates for educational purposes only — consult a financial professional for personalized advice.