It’s the classic financial conundrum: you look at your mortgage statement and your investment account and think, “Should I be dumping every extra dollar into paying off this mortgage, or should I be investing it in the market?” On one hand, paying off your mortgage early gives you the comforting feeling of being debt-free. On the other, investing could make your money work harder for you in the long run. Which path is right? Spoiler: there’s no one-size-fits-all answer.

The Case for Paying Off Your Mortgage

Let’s start with the obvious. Paying off your mortgage early guarantees a return equal to your mortgage interest rate. If you have a 4% interest rate, that’s effectively a 4% return on your money – guaranteed. That’s a nice, stress-free return that doesn’t depend on the stock market.

There’s also a psychological benefit. Owning your home outright brings peace of mind. No monthly payments, no looming interest, and the satisfaction of knowing your biggest asset is fully yours. For many people, that emotional relief is worth more than any theoretical gains from the stock market.

Paying off your mortgage early can also free up cash flow for other priorities. Without a monthly house payment, you can redirect money toward travel, hobbies, or even new investments – the choice is yours.

The Case for Investing Instead

Now let’s talk about the allure of the market. Historically, the stock market has returned roughly 7–10% per year after inflation. Compare that to your mortgage interest rate, and investing could yield a higher long-term return than paying down your loan early.

Investing also keeps your money more liquid. Cash in the market can be sold if an emergency arises, whereas extra money sunk into a house isn’t easily accessible. Liquidity matters if you want flexibility or if unexpected expenses crop up.

And don’t forget tax considerations. Mortgage interest may still be deductible depending on your situation, effectively lowering your true cost of borrowing. Meanwhile, investments in tax-advantaged accounts like IRAs or 401(k)s can compound faster than your mortgage would save you in interest.

It Depends on Your Situation

Here’s the catch: the right choice depends on your financial goals, risk tolerance, and mortgage details. Some questions to consider:

• What’s your mortgage interest rate?
• Do you have high-interest debt elsewhere?
• Are you comfortable with market risk?
• Do you value psychological peace of mind over potential higher returns?
• How much liquidity do you need for emergencies or opportunities?

There’s no universal answer. For someone with a low-rate mortgage who’s comfortable investing, putting extra cash in the stock market might make sense. For someone with a high-rate mortgage or anxiety about debt, paying off the house early could be the smarter move.

How to Make the Decision

This is where math beats guesswork. Tools like the BiggerPockets Money Mortgage Payoff Calculator let you model your exact numbers. You can see how paying off your mortgage faster compares to investing the same amount, factoring in interest rates, expected market returns, taxes, and your timeline. Seeing the results side by side removes the guesswork and lets you make a decision grounded in your actual financial picture, rather than generic advice.

The Bottom Line

There’s no one-size-fits-all answer to the mortgage-versus-investing question. Both strategies have valid points: paying off your mortgage early guarantees a return and provides peace of mind, while investing could deliver higher long-term gains and more liquidity.

The best approach is to run your numbers through a reliable calculator, like the BiggerPockets Money Mortgage Payoff Calculator. It will give you a personalized comparison and show which path aligns better with your goals and risk tolerance. At the end of the day, a data-driven choice beats guessing – and you might even find a hybrid strategy that lets you do a little of both.

Action Step

Take a few minutes this week to plug your numbers into the BiggerPockets Money calculator. Compare paying extra toward your mortgage versus investing, and see what makes the most sense for your situation. You might be surprised at what the math tells you.