It's one of the most common questions in Australian personal finance: if you have spare cashflow, should you direct it into extra mortgage repayments or invest it for higher growth? Both strategies have the same starting cashflow — what differs is whether you use the surplus to retire debt at the loan rate (guaranteed return = the loan interest rate, tax-free), or build a parallel investment that compounds at a hopefully-higher market return (but is taxed each year on income, and on capital gains when sold).

The maths is decided by two things: the gap between the loan rate and your after-tax investment return, and how long you stay in the strategy. At a 6% mortgage rate and a 7-8% expected return on a balanced portfolio, the investing path looks better on paper — but the gap is thin once tax is properly accounted for. At a 6% mortgage rate and 13% pa returns from a geared (leveraged) fund, the investing path can dominate — but you've taken on amplified risk including potential margin calls. There's no universal right answer.

This calculator runs both strategies in parallel and finds the crossover year — the moment when the investment balance, net of CGT, equals the outstanding loan balance. At that point you could (in principle) cash out the investment, pay off the loan, and redirect the freed-up cashflow into a new investment for the remainder of the original loan term. We also surface the break-even return — the rate at which both strategies leave you with identical net wealth at end-of-term. Above that rate, investing wins; below it, paying down the loan wins. Pair this with our Mortgage Repayment Calculator for the loan-side detail, or our Investment Return Calculator for the investment-side detail in isolation.