Put in your numbers and see what each path looks like — interest saved, investment pot, and which strategy builds more wealth over your time horizon.
The investment side of this calculator assumes you put your monthly amount into a Stocks & Shares ISA. Unlike a cash savings account, a Stocks & Shares ISA holds investments — funds, shares, or trackers — and the return you earn depends entirely on what you invest in. Select the profile below that best matches your approach, or enter a custom rate if you have a specific fund in mind.
What best describes your investment approach?
A globally diversified equity index fund — for example a FTSE All-World or global tracker held inside a Stocks & Shares ISA. The most common long-term approach for UK investors. Source: Dimson, Marsh & Staunton (UBS Global Investment Returns Yearbook 2025) — worldwide equities returned 5.2% real p.a. over 1900–2024, implying ~7–8% nominal at long-run average inflation. Deduct your platform fee (typically 0.15–0.45%/yr).
| Year | Balance (overpay) | Balance (standard) | Portfolio growth | Interest saved | Advantage |
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Every pound you overpay saves interest at exactly your mortgage rate — guaranteed, tax-free, and risk-free. If your mortgage rate is 4.5%, overpaying your extra monthly amount delivers a guaranteed 4.5% equivalent return on that money.
No investment can promise that. The comparison only tips toward investing when expected returns consistently beat your mortgage rate — and those returns are never guaranteed.
Investing inside a Stocks & Shares ISA means no Capital Gains Tax and no income tax on dividends — ever. Over 20+ years this compounds significantly.
The £20,000 annual ISA allowance is use-it-or-lose-it. Years spent overpaying instead of investing forgo this tax shelter permanently.
Money overpaid into your mortgage is locked away — you can only access it by remortgaging or selling, which costs time and fees.
An ISA can be withdrawn at any time. For most people, keeping 3–6 months of expenses in accessible savings before overpaying is wise — and ISA funds count toward that buffer.
The calculator tracks one decision: what to do with your extra monthly amount. Both strategies deploy the same £/mo for your full mortgage term — either into ISA investments from day one, or into mortgage overpayments first.
If overpayments clear the mortgage early, that same monthly amount is redirected into the ISA for the remaining years at the same assumed return. This makes it a true like-for-like comparison: same money, same period, same investment rate — the only difference is when the money goes into the ISA.
It depends on your mortgage interest rate versus your expected investment return. If your mortgage rate is higher than your expected investment return, overpaying typically wins on pure numbers. If your investment return is higher, investing in a Stocks & Shares ISA tends to produce more wealth over time. Other factors include liquidity (ISA funds are accessible anytime; mortgage equity is locked), risk tolerance (overpaying gives a guaranteed return equal to your rate), and whether you're close to an LTV threshold that would unlock a better remortgage rate.
Overpaying your mortgage gives you a guaranteed, risk-free return equal to your mortgage interest rate. For example, on a 4.5% mortgage, every pound you overpay saves 4.5% interest — equivalent to a 4.5% risk-free return. This beats cash savings rates in many environments and is competitive with bond returns. The trade-off is that unlike an ISA, you cannot easily access the money once paid down.
The annual ISA allowance is £20,000 for the 2026/27 tax year. This covers all ISA types combined — Cash ISA, Stocks & Shares ISA, Innovative Finance ISA, and Lifetime ISA (which has its own separate sub-limit of £4,000). This calculator caps the investment scenario at £20,000 per year.
An Early Repayment Charge (ERC) is a fee charged by your lender if you repay more than a set amount in a given year, typically 10% of your outstanding balance. Most fixed-rate mortgages allow overpayments of up to 10% per year without penalty. Exceeding this limit triggers the ERC, which can offset the interest savings from overpaying. This calculator warns you if your planned overpayment would exceed the annual limit.
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Platforms you may want to explore
This is not a recommendation. The platform listed above is provided for information only. Please research your options and consider your personal circumstances before opening any account. The value of investments can go down as well as up. Capital at risk.
* Sources for historical return figures:
All figures are illustrative. Past returns are not indicative of future results and individual outcomes will vary based on asset allocation, fees, and market conditions.