Interest rates are holding steady. Should you overpay the mortgage or invest?

We have all watched the Bank of England base rate obsessively for the last couple of years. Now that things are settling, I constantly get asked the same question: 'Should I throw my extra cash at the mortgage, or put it in my ISA?'

Mathematically, the answer is usually to invest. If your mortgage is locked in at 4.5% and you realistically expect a global equity index fund to return 7% on average over the next decade, investing makes you wealthier on paper.

But humans are not spreadsheets.

The Sleep Factor

There is a massive psychological benefit to being debt-free. Paying down your mortgage reduces your required monthly outgoings. This buys you flexibility. If you want to take a career break, start a business, or just work four days a week, having a tiny mortgage payment makes those dreams viable.

My advice? Do both. Use your Spending Plan to allocate a portion of your 'Future Self' money to overpaying the mortgage, and another portion to feeding your Stocks and Shares ISA. You get the mathematical growth of the market, paired with the psychological safety of watching your debt shrink.