$1,000 extra monthly — where should it go?
Mortgage Balance
$280,000
5.5% fixed
Extra per Month
$1,000
for 10 yrs
Interest Saved
$106,000
pay-down route
Investment Value
$207,000
8% return
| End of Year 10 |
Pay Down Mortgage |
Invest $1k/mo |
Advantage |
| Remaining Balance |
$54,000 |
$164,000 |
$110,000 |
| Interest Saved / Return |
$106,000 |
$87,000* |
-$19,000 |
| Net Equity Gain |
$226,000 |
$207,000 |
+$19,000 |
| Risk Level |
Low |
Medium |
— |
*Assumes 8% average annual return; actual results may vary.
Direct the extra $1,000 to your 5.5% mortgage. The guaranteed
interest saved ($106k) beats a risky 8% market return, shortens your loan by ~6.5 years, and frees cash for investing once it's gone.
If you value liquidity, split the $1k: $700 to the mortgage
and $300 into a broad-market ETF. You keep flexibility while still
erasing the high-interest debt ahead of schedule.
Analysis based on 30-year amortizing loan at 5.5% with $1,000 additional principal payments vs. 8%
average investment return, 15% capital-gains tax, and 10-year horizon.