Pay off the mortgage or invest?

If the expected return you are willing to plan with is higher than the mortgage rate, investing the extra payment tends to win on a spreadsheet. If you value a paid-off house more than that spread, or the return is uncertain and the mortgage rate is high, extra principal is the cleaner choice. Liquidity sits in between.

Arc · Published September 18, 2026 · Updated September 18, 2026

The comparison, without the slogans

Extra principal earns a sure saving equal to the mortgage rate, after tax if you itemize and the deduction is real for you. Most households now take the standard deduction, so the headline mortgage rate is often the right rate to beat.

Investing earns whatever the portfolio earns, which can be less than the mortgage rate for years. A higher average is not a higher guarantee.

Example

A 6% mortgage and a 5% planning return favor extra principal in the simple model. A 3% mortgage and a 5% planning return favor investing, if you will not need the money and can tolerate the balance staying on the house. The calculator runs that comparison with an extra monthly amount. It is not a full tax return.

What the rate leaves out

Cash you cannot get back without refinancing or selling.
A bear market in the same years you wish you had liquidity.
Private mortgage insurance that drops when the balance drops.
The psychological value of a paid-off house. That one is allowed to matter. It is not a market return.

Common questions

Should I invest while I still have credit-card debt?

Usually no, beyond a small cash buffer and a workplace match. A card at 18% is a different problem from a 6% mortgage. See the high-interest debt playbook.