Extra Mortgage Payment Calculator: Prepay or Invest the Difference?
Every extra dollar you put against your mortgage earns a guaranteed return equal to your mortgage rate — tax-free, risk-free, no market required. But the same dollar invested in a diversified portfolio has historically earned more over long horizons. Which path leaves you further ahead is the single most common question in Canadian personal finance, and most calculators only answer half of it.
This calculator answers both halves honestly. It compares two paths that spend exactly the same money every month until your original payoff date: prepay the mortgage and then invest the freed-up payment once it’s gone, or keep the regular payment and invest the extra all along. Because cashflow is identical, the ending balances are directly comparable — the interest you save by prepaying shows up automatically as more months of bigger investment contributions.
What the numbers mean
- Interest saved and time saved — the classic prepayment payoff: how much less interest you pay and how many years earlier the mortgage dies.
- Prepay, then invest — your investment balance at the original payoff date if you prepay first and invest the whole payment after the mortgage is gone.
- Invest the extra all along — your balance if the mortgage runs its full term while the extra compounds in the market.
The gap between those two numbers is the true cost (or benefit) of prepaying. When your mortgage rate and expected return are close, the gap is small — and the deciding factors become risk tolerance, whether the investment room is tax-sheltered (TFSA/RRSP), and whether you’d actually invest the money rather than spend it.
What Makes cinder.fi Different
- Real amortization, not approximations: the in-app version reads your actual loan — current balance, remaining term, recorded prepayments — and simulates from today forward.
- Tax-aware comparison: RRSP contributions carry a deduction; your mortgage interest (in Canada) doesn’t. cinder.fi models the after-tax outcome for your bracket and province, not a generic rate-vs-rate rule.
- Whole-plan context: prepaying changes your retirement-year housing costs, your net worth mix, and your Cinder Score. See the decision inside your full projection instead of in isolation.
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