Debt2 min read · Updated 21 October 2026
Overpay the mortgage or invest? A UK comparison with numbers
How to decide between overpaying a mortgage and investing in an ISA in the UK, with a £20,000 example and the break-even return you need to beat.
The core idea
Paying extra on a loan earns your loan rate, with no risk. Investing may earn more, but it is not guaranteed and gains may be taxed. So the question is whether investing beats your loan rate by enough to be worth the risk.
A worked example
£20,000 over 10 years. A 4.5% mortgage is a sure 4.5%, about £31,059. Invested at 6% in a stocks and shares ISA, about £35,817. Investing wins by about £4,800 if the return holds.
A simple rule
If your mortgage rate is below about 4%, investing in an ISA usually wins over a long time. Above about 6%, overpaying is hard to beat. In between, splitting is sensible.
Check before you overpay
Check your overpayment allowance and early repayment charges, and keep a cash cushion. A fixed deal may charge for overpaying beyond the limit.
Common questions
Is paying off a loan a good return?
Yes. It is a sure return equal to your loan rate, with no market risk.
Can I do both?
Yes. Many people split the money, keeping a cash cushion first.
Does the investment return include tax?
Compare after tax. The calculator lets you enter a tax rate on gains.