Recast Your Mortgage or Invest the Lump Sum?
Payment breakdown
Interest & break-even
Total monthly housing cost
Where your money goes over time
If the freed-up cash is invested at 7%, the saved payments grow to about $0 by payoff.
Four ways to use that cash
| Scenario | Monthly P&I | Interest left | Payoff | What happens |
|---|
Show the full amortization schedule (before vs after)
| # | Int. now | Prin. now | Bal. now | Int. recast | Prin. recast | Bal. recast |
|---|
How to use this calculator
- Enter your current loan balance, interest rate, and remaining term.
- Enter the lump-sum amount you plan to pay toward principal.
- Click Calculate to see your new payment, interest savings, and comparison.
About this tool
Putting a windfall on the mortgage guarantees a return equal to your interest rate. Investing it might earn more — or less. Here's how to weigh the guaranteed win against the risky upside, with a calculator that models both.
The decision comes down to one comparison: your mortgage rate versus your expected after-tax investment return. Recasting (or any principal payment) earns you a guaranteed return equal to your mortgage rate — every dollar of interest you don't pay is a dollar earned, risk-free. Investing the same lump sum reaches for a higher number, but the return is uncertain and taxable.
When investing tends to win
If your mortgage rate is low — think 3% to 4% locked in during a low-rate window — the bar for investing is low too. A diversified portfolio has historically cleared that hurdle over long periods, so keeping the cheap mortgage and investing the cash can build more wealth. The catch: you have to actually invest it and leave it alone through the ups and downs.
When recasting tends to win
If your rate is high (6%–7%+), a guaranteed return at that level is genuinely hard to beat without taking real risk — recasting looks great. It also wins on temperament: if the lump sum would otherwise trickle into spending, the forced, guaranteed saving of a recast is the safer bet. And unlike a pure extra payment, a recast also lowers your required monthly payment, adding a cash-flow cushion.
If they're close, or you value certainty and a lower payment → lean recast.
It doesn't have to be all-or-nothing
Splitting the windfall is perfectly reasonable — recast part to lower the payment and lock a guaranteed return, invest the rest for growth. Whatever you choose, secure an emergency fund and clear any high-interest debt first; both beat a mortgage rate and an average market return. Use the calculator above to see, for your exact rate and a return you specify, how the recast path compares with investing the lump instead.
Recast or invest — FAQ
Is it better to recast or invest the money?
It depends on your mortgage rate versus your expected after-tax investment return. Recasting is a guaranteed return equal to your rate; investing may earn more but carries risk. The wider that gap, the more investing is favored.
How does recasting compare to investing?
Recasting locks in savings equal to your mortgage rate with no risk. Investing the same lump sum could beat that over time, but returns aren't guaranteed and are taxable. The calculator shows both paths side by side.
When does investing usually win?
When your mortgage rate is low (say 3–4%) and you can reasonably expect a higher long-run return, investing the lump sum often comes out ahead — provided you'd actually invest it and leave it invested.
When does recasting win?
When your rate is high, when you value a guaranteed return and lower payment, or when you wouldn't reliably invest the cash. A guaranteed return equal to a 6–7% mortgage rate is hard to beat safely.
Should I keep an emergency fund either way?
Yes. Fund your emergency savings and pay off high-interest debt before either recasting or investing a windfall.