Overpay the mortgage or fund the portfolio?
Both paths run to the same date and are measured by net worth — including tax on capital gains and what frees up once the loan is gone.
The model keeps the interest rate constant. Overpayment limits, the end of the fixed-rate period and prepayment penalties are not modelled.
Invest is ahead by €29,844.00 after 20 years.
Investing pays off from a gross return of 4.5%.
Advantage
€29,844.00
Break-even return
4.5%
Debt-free earlier by
8.6 years
| Path | Portfolio after tax | Remaining debt | Net worth | Debt-free after |
|---|---|---|---|---|
| Repay | €4,045.58 | €0.00 | €4,045.58 | 19.8 years |
| Invest | €137,442.74 | €103,553.17 | €33,889.57 | 28.4 years |
The investing path incurs €14,818.17 of tax on capital gains. Repaying faster saves €35,582.31 of interest over the period — tax-free.
Why comparing percentages misleads
Return above interest rate is not a complete answer
Three effects flip the result once you actually calculate it.
Saved interest is tax-free
Interest you avoid is a certain after-tax return. Capital gains are taxed at 26.375%, so the gross return has to sit noticeably above the loan rate just to keep up.
Different bases
Loan interest applies to a shrinking balance, investment return to a growing portfolio. Comparing only the percentages compares two different amounts.
Certainty has value
The interest saving is guaranteed, the return is not. If your budget is tight or your fixed-rate period ends soon, repaying buys planning certainty that no pure number comparison shows.
Frequently asked
Repaying versus investing
Roughly once the expected after-tax return exceeds the loan rate. With 26.375% German capital gains tax and a 30% partial exemption on an equity ETF, the gross return has to be about a fifth above the loan rate. The calculator shows the exact figure for your numbers.
That is in your loan agreement — 5% of the original loan amount per year is common, some banks allow 10% or negotiate later. Without an agreed right the bank can charge a prepayment penalty.
If your fixed rate expires in a few years, the balance at that point is what matters: the smaller it is, the less a higher follow-up rate hurts. This calculator assumes a constant rate and therefore leaves that risk out.
In practice that is the most common answer: part of the spare money into overpayments, the rest into the portfolio. Set the extra amount to half to see how the result shifts.
Embed this calculator on your own site
Free, no sign-up, no tracking. A one-line snippet that resizes itself — for blogs, guides and comparison sites.
More calculators
You might also like
Don't just calculate — keep track
Planafolio follows your portfolio, taxes and retirement plan automatically. Start free, no credit card.
Start for free