£400,000 at 4.92% over 25 years · £500 a month extra

£500 a month clears it 7 years 3 months early

You'd pay £2,820 a month instead of £2,320, and save £95,436 in interest. That saving is arithmetic — no forecast, no assumptions.

Interest £295,926 → £200,490Cleared in 17 years 9 monthsPayment £2,320

Overpaying is itself a return: every £1 off the balance saves you 4.92% a year, guaranteed, tax-free. That is the number anything else has to beat.

Interest falls from £295,926 to £200,490

Or invest it instead

This half is a guess and the half above is not — that is the whole point of the comparison, so the two are kept apart.

Break-even return

5.03%

What investing must average, after charges and tax, to beat overpaying over the same 25 years. It sits near your 4.92% mortgage rate, a little above it at higher rates, because clearing the debt early frees the whole payment to invest sooner.

Overpay, then invest

£345,806

Clear the mortgage 7 years 3 months early, then put the whole £2,820 a month in for the rest of the term

Invest all along

£557,787

Keep the mortgage its full 25 years and invest the £500 a month from the start

Difference

+£211,981

Investing ahead, if returns average 9.3% a year for 25 years

Both columns end at the same date with the mortgage gone, so they are comparing like with like — a lot of overpayment calculators set interest saved against an investment pot, which are not the same kind of number.

9.3% is the S&P 500's total return since 1871, in dollars, before charges and tax. Three things move it: it is in dollars, and a sterling investor's return also rides on the exchange rate; a tracker takes about 0.1–0.2% a year, and outside an ISA so does the taxman; and our own sterling series reads about 13.5% a year only because it starts in 1975, near a market bottom. Change the figure above to whatever you actually believe.

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What this assumes

Saving £95,436 in interest is certain. The investing figure is not.
Assumes 4.92% for the whole 25 years. Almost everyone is on a two- or five-year fix.
Interest charged monthly on the outstanding balance. Some lenders charge daily, which makes overpaying slightly better than shown.
Nothing here is advice. An emergency fund, your pension and any dearer debt all come first, and none of them are in this calculator.