Parallel

Model assumptions

Results depend on assumptions. Here is what we hold constant and when conclusions can flip.

If you want to compare strategies directly, head to the calculator and then return here to interpret the results.

How to interpret the results

Investing only wins if after-tax returns exceed the mortgage rate after fees and taxes over the same horizon.
Extra principal guarantees payoff timing, but can reduce long-term growth.
If your assumptions are wrong, the comparison can flip. Use the calculator to stress-test scenarios.

Loan

Fixed-rate amortization with constant monthly payments.
Extra payments go directly to principal.
Any lump sum applies to the additional payment scenario only.
No refinancing, prepayment penalties, or escrow effects.

Investing

Constant annual return and fee, compounded monthly.
Investment fee is fixed at 0.45% annually.
Volatility and sequence-of-returns risk are not modeled.
Contributions match the monthly surplus input.
Lump sum is invested at month 0 for investing scenarios.
Withdrawals only occur under the selected policy.

Taxes

Capital gains tax applied to realized gains on withdrawals.
Tax rate is fixed (currently 15%) across the horizon.
No deductions, credits, or tax-advantaged accounts modeled.

Home value

Home value grows at a fixed CAGR (default 2.5%).
Net worth uses home value at horizon minus remaining loan balance.
Home equity is only based on this modeled price path.

What this does not model

Inflation or changes in real purchasing power.
Maintenance, taxes, or insurance on the home.
Behavior changes, job risk, or cashflow variability.
Mortgage interest deduction or itemized tax impacts.

Market context (S&P 500)

The S&P 500 has historically returned around 10% annually before inflation over long periods, and about 6% to 7% after inflation. Actual results vary widely by decade and are not guaranteed.

This calculator uses fixed return inputs to highlight trade-offs. Past performance does not predict future results.

Disclaimer

This tool provides educational projections only and is not financial advice. It does not account for your full financial situation, taxes beyond the assumptions listed, or non-modeled risks. Consult a qualified professional for advice specific to your situation.