Overpay Mortgage or Invest? The Honest Answer
If your mortgage rate is above your expected after-tax investment return, overpay. Otherwise, invest. The break-even is usually around 5%.
Overpaying your mortgage is a guaranteed return equal to your mortgage rate. Investing offers a higher expected return but with volatility.
When to overpay
Mortgage rate above 5%. You're risk-averse. You're close to retirement. You've already maxed pension matching.
When to invest
Mortgage rate below 4%. Long time horizon (10+ years). You're using a Stocks & Shares ISA or SIPP for tax efficiency.
The hybrid approach
Split contributions 50/50. You capture some guaranteed return and some market upside.
Estimate your monthly mortgage payment based on property price, deposit, interest rate and term. Useful for both first-time buyers and remortgaging.
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