Investing may beat overpaying over long horizons, but only if markets deliver. This calculator lets you model conservative, balanced and adventurous scenarios alongside guaranteed interest savings.
Investment returns are not guaranteed. We model long-run averages.
UK equities have averaged ~5% real return over very long periods. Bonds have averaged ~1–2%. The FCA requires providers to show 2%, 5% and 8% projections.
This is a projection, not a promise. Markets go down as well as up, a bad 10-year run can make overpaying look wise in hindsight.
Over 25 years, a balanced stocks & shares ISA has historically beaten most mortgage rates. That's not the same as saying investing is always the right choice, it's saying the expected return is higher, with much higher variance.
Overpaying gives you a guaranteed return equal to your mortgage rate. If your rate is 4.5%, every overpaid pound earns 4.5% tax-free, risk-free, for as long as it stays in the mortgage. Investing offers a probable return based on market performance. Historical UK equity returns sit around 5% real (above inflation), but with year-on-year swings that can easily be -20% or +30%.
Three time horizons matter:
Behavioural economics matters. Most investors sell at the bottom, panic-reduce contributions when markets fall, or bail out before the long-run averages have time to work. If you'd sell out of a balanced ISA during a bad year, an overpayment schedule you can't unwind may suit you better in practice.
Before overpaying, consider whether you've filled your £20,000 ISA allowance (2025/26). Unused ISA allowance is lost forever when the tax year ends. Overpayment capacity doesn't expire. MoneyHelper's ISA guide is a good neutral reference.
If your mortgage rate is above ~5%, overpaying is usually a strong choice. If it's below ~3%, investing a balanced portfolio over 15+ years usually wins. Between 3% and 5% it depends on your time horizon, your risk tolerance and whether you'd actually stay invested through a downturn.
See our overpay vs pension calculator for the most tax-efficient long-term option, or the savings account comparison for short-horizon cash.