Run a quick comparison before paying off your mortgage — don’t rely on gut feeling
Paying the mortgage off early is the same as steadily earning your mortgage rate. So ask only one thing: is the after-tax return you can get steadily over the long run higher than the mortgage rate? If it is higher, do not rush to pay it off. If it is not, or you cannot say, pay it off. In the early years of equal monthly payments of principal and interest, interest is a large share of what you pay, so the earlier you repay, the more you save. The bank app's "early repayment estimate" can show the figure directly.
No cost at all. It only takes about half an hour to do the…
The calculation works like this: let r be the annual mortgage rate as stated in your contract. As of 20 August…
No cost at all. It only takes about half an hour to do the math. You’ll need to honestly estimate the steady after‑tax return you can expect over the long run.
The calculation works like this: let r be the annual mortgage rate as stated in your contract. As of 20 August 2026, the 5‑year LPR in China is 3.5%; the actual rate you pay is either higher or lower than this figure. Next, let g represent the after‑tax annual return you can expect from an alternative investment — the average percentage gain you’d earn each year by putting that money elsewhere. Paying off the mortgage guarantees you a return of exactly r; each dollar you apply to the loan earns you that rate for sure. If g consistently exceeds r, it’s better to keep the money invested. If g is lower than r, or if you can’t reliably predict it, paying off the loan locks in a risk‑free return equal to r. Again, because most of the early payments under an equal principal‑and‑interest plan cover interest, the earlier you pay, the more you save. This effect is clearly shown by the numbers produced by your bank’s pre‑payment calculator (Chinese rates as of 2026).
全国银行间同业拆借中心受中国人民银行授权 (2026). 2026 年 8 月 20 日贷款市场报价利率（LPR）公告. https://www.chinamoney.com.cn/chinese/rdgz/20260820/3399885.html
Open source linkThis section provides only the calculation method, not a definitive recommendation. It’s relatively rare for investment returns to reliably surpass mortgage rates. Regardless of which option you choose, be sure to keep enough cash on hand for emergencies. Also, check your contract for any prepayment penalties. Before repaying, you can first ask the bank for a lower rate; see Section 15, Item 15 on negotiating a rate reduction. This information is not intended as financial advice.