How does my FIRE date affect the mortgage payoff decision?

Your FIRE date determines your 'time horizon.' The longer your horizon, the more time investments have to compound and outperform your mortgage interest rate. If your FIRE date is very soon, the safety of a paid-off home may be more valuable than market volatility.

Is paying off a mortgage early a good investment?

Paying off your mortgage early is a 'guaranteed' investment return equal to your loan's interest rate. For example, a 7% interest rate mortgage provides a guaranteed 7% return on every extra dollar paid, which is highly competitive compared to historical stock market averages after adjusting for risk.

Should I invest or pay off my mortgage if I want to retire early?

Mathematically, you should choose the path that yields the highest after-tax return. However, retiring early (FIRE) also requires low monthly expenses. A paid-off home significantly reduces your 'FIRE Number' (the amount of assets needed to retire), which can sometimes allow you to retire sooner even if it isn't the 'perfect' mathematical choice.

Mortgage Pay Off vs Invest Calculator

Should I Pay Off My Mortgage Early? Or Invest?

Stop guessing! This calculator determines if paying off your mortgage or investing builds more wealth for YOU. Customize expected stock market returns, your timeline & interest rates to match your exact situation. Find out which will build more wealth!

How This Calculator Works

Basic mortgage calculators show interest savings from paying off your loan early. But they ignore what you could earn by investing that money instead. Further, this gets even more complex when you factor in if you can get tax savings in certain scenarios. This calculator compares both paths side-by-side, showing which one maximizes your net worth by your FIRE date.

Enter Your Personal Financial Profile:

Your FIRE Timeline When do you plan to achieve Financial Independence and Retire Early? This is your target date for comparison.
Mortgage Details Your remaining balance and interest rate—the two factors that determine your total interest costs.
Expected Investment Returns Your realistic stock market return assumption (historical average is 10% annually, but you can customize based on your risk tolerance and market outlook).
Tax Considerations We factor in mortgage interest deductions and investment tax implications to show your true after-tax wealth.

The Analysis: We run two parallel scenarios from today until your FIRE date:

Pay Off Mortgage Early: Extra payments reduce your balance, eliminating interest and freeing up cash flow sooner
Invest Instead: Extra money goes into investments, compounding over time in the market

The Result: A clear answer showing which strategy puts more money in your pocket when you’re ready to retire early, plus the dollar difference between approaches.

Why the “Payoff vs. Invest” Debate Matters for the FIRE Community

Achieving Financial Independence and Retiring Early (FIRE) is a game of math and margins. While traditional advice often encourages a debt-free lifestyle, the math of low-interest debt can tell a different story.

The Opportunity Cost of Home Equity

Every dollar you “park” in your home through an extra mortgage payment is a dollar that isn’t compounding in a brokerage account. If your mortgage rate is 6% but the S&P 500’s historical average is 10%, that 4% difference—the “spread”—can amount to hundreds of thousands of dollars over a 30-year period.

The “Guaranteed Return” vs. Risk

Paying off your mortgage provides a guaranteed return on your money (equal to your interest rate). Investing involves risk, but historical data favors long-term market participation. This calculator helps you decide if the risk-adjusted return of the market is worth more to your FIRE timeline than the peace of mind of a paid-off home.

Factoring in the MITD (Mortgage Interest Tax Deduction)

For those who itemize, the federal government effectively “subsidizes” a portion of your interest. This means your 6.5% interest rate might actually feel like 4.9% after tax savings, making the choice to invest even more compelling. Our tool is one of the few that handles this complexity automatically.

Disclaimer and Important Note:

This mortgage vs invest calculator is still very new to our site – please report any bugs, issues with the logic, or suggestions for improvement to Scott@biggerpocketsmoney.com. Thanks so much!