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Loan Balance
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Current Payment
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Additional Payment
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Loan Interest Rate
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Loan Interest Deductibilty
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Investment Return Rate
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Tax Bracket
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Investment Type
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After-Tax
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Prepay
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Invest
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Total Interest ( yrs)
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Loan Payback Time (Years)
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Loan Balance - Investment :
In your case it is wiser to prepay than to invest
Investment - Loan Balance :
In your case it is wiser to invest than to prepay
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PREPAYING
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INVESTING
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Month
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Loan Bal (P)
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Int Paid (P)
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Tax Ded (P)
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Loan Bal (I)
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Int Paid (I)
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Tax Ded (I)
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Inv Bal (I)
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Assumptions:
This estimation assumes you will pay a fixed amount every month to either your loan prepayment or to some type of after-tax or tax deferred investment. If it is after-tax it will be more available to you, but every 12 months you will be forced to pay tax on your annual yield. This also assumes that you take the extra tax savings by NOT prepaying (prepaying lowers your deductible interest payments) and you put the tax savings into the investment as well. This also assumes that the top income tax rate will stay the same for a long time. This tax rate should also include your state income tax too if applicable.
Information and interactive calculators are made available to you, as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to anyone’s individual circumstances. All examples are hypothetical and are for illustrative purposes. Related to tax implications, property purchase and sale prices, and loan terms clients need to seek personalized advice from qualified real estate and tax professionals.