1. What is Mortgage Savings vs Investment Return?

This calculator compares the financial benefit of paying down your mortgage versus investing the same amount of money. It helps determine which strategy provides better financial returns based on your specific mortgage rate and expected investment returns.

2. How Does the Calculator Work?

The calculator uses the following comparison:

Where:

• Mortgage Savings — Amount saved on interest by paying down mortgage
• Investment Return — Potential gains from investing the money instead
• Net — Difference between investment gains and mortgage savings

Explanation: The calculation compares the guaranteed return from mortgage interest savings against the potential return from investments, helping you make an informed financial decision.

3. Importance of Comparing Mortgage vs Investment

Details: This comparison is crucial for financial planning as it helps optimize your debt management and investment strategy, potentially saving thousands in interest or generating significant investment returns.

4. Using the Calculator

Tips: Enter your mortgage amount in currency, mortgage rate as a decimal (e.g., 0.045 for 4.5%), and expected investment return as a decimal. All values must be valid positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Should I always choose the option with higher return?
A: While higher return is generally better, consider risk tolerance, tax implications, and liquidity needs before deciding.

Q2: How accurate is this comparison?
A: This provides a basic comparison. Actual results may vary based on investment performance, tax considerations, and changing interest rates.

Q3: Should I consider my mortgage term?
A: Yes, the time remaining on your mortgage affects the total interest savings calculation.

Q4: What about tax implications?
A: Mortgage interest may be tax-deductible in some countries, while investment returns may be taxable. Consult a tax professional.

Q5: Is there a guaranteed return with mortgage paydown?
A: Yes, paying down mortgage debt provides a guaranteed return equal to your mortgage interest rate, while investments carry market risk.