Pay Off Mortgage vs Invest Calculator

Mortgage Prepayment Analysis Calculator Spreadsheeet

In writing my recent article The magic of a one-time partial mortgage payment: your net worth increases I ended up polishing up and optimizing my Pay Off Mortgage vs Invest Calculator.

Pay Off Mortgage vs Invest Calculator Spreadsheet

Now you can easily run scenarios with just a few clicks with the new Pay Off Mortgage vs Invest Calculator Spreadsheet.

Click here to “Make a Copy” of the spreadsheet.

Then punch in your info here:

You can toggle your expected returns here. I set it at 8% as default:

And then you can let the spreadsheet do the rest of the analysis for you. It should look something like this:

Mortgage Payoff vs. Investment Spreadsheet

So, if like me you end up trying to decide between paying down your mortgage or investing, you can calculate out the best option for your specific mortgage.

This spreadsheet is how I figured out that paying down 50% of my mortgage was better than paying it in full.

Please let me know if you run into any issues with the spreadsheet in the comments. Thanks!

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  1. Why doesn’t the spreadsheet consider the growth of the value of equity put into the home over the same time period in the scenarios where some or all of the mortgage is paid off?

    1. Column J is going to count any equity you are accumulating/saving, and that gets added together with column K (your invested money) to come up with a “Net Worth.” In either scenario the growth in market value of the house will be the same, which is why market value is being ignored.

      1. Is the market value of the home in ten years staying the same because the spreadsheet assumes no home appreciation? Is that accounted for elsewhere? Or should that not be considered, even if it is appreciating?

          1. Sorry one last question. If the full mortgage is paid off and we assume the monthly payment savings are invested each month into the market with the same market returns upside, how would this look different?

  2. My wife and I are building in a 55+ community, with completion expected Dec 2021. Sale price is $500,000, and we are putting $100,000 down, so the principal will be $400,000.
    Based on your calculator, it is best to make a one time payment of $266,000. How soon should we do that?

    1. I can’t/don’t want to give financial advice. I would say just do whatever works best for you. The calculator is a tool to help make a decision, but only you know how to best do that.

      As far as early payments go, I believe you can make them as soon as your mortgage is setup and online, but will depend on your mortgagee.

  3. Interesting analysis, I like it! I recently paid down and will pay off the rest of our mortgage in the coming months. Agree completely, mathematically it doesn’t make sense given the stock market usually produces better returns. But there is higher volatility for sure.

    I wonder how it would look on your calculation if you dollar cost average the money you would have spent on your mortgage back into investments. So, you spend 300,000 now and free up 1,500 per month or so. Use that money to invest and grow over the remaining life of the mortgage. It won’t catch up, i think, but still interesting to compare.

    Paying off the mortgage for me was essentially a bond allocation alternative, lower our risk and lower our expenses.

    1. Yeah you are right that I should add in an additional row/option with dollar cost averaging the freed up payments. Here is what I got from punching this in here:

      Results: $524,109 Net Worth. $300K + $224,109

      So, if you do contribute your exact mortgage payments via dollar cost averaging to the market, you will come out in great shape as well. Less than the 50/50 option, but you’d have more piece of mind.

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