Prepay the loan or invest?
Prepay the loan or invest? Polish personal-finance authors and foreign institutions agree on one thing: the order matters. First a financial cushion, then expensive consumer debt, and only then the mortgage dilemma. This text shows the arithmetic behind each step, and the calculator above runs it on your own numbers. We do not say what to do: we show what the numbers give under assumptions you choose yourself.
The short answer: cushion first, then expensive debt, and only then the mortgage
The cushion is counted from expenses, not from income, and after buying a home it must include the instalment. The usual advice is 6 months; 3 for a young person without obligations, 6–12 for the self-employed or anyone with irregular income. Cushion money is kept where you can take it out within days: a savings account, a deposit or savings bonds with early redemption. Not in equities, not in crypto and not in an IKE, because an early withdrawal from there costs money.
The calculator above works out only the last step: it compares prepaying with investing the same money. It doesn't take the cushion off and doesn't pay dear debts for you. Under the result it reminds you of the cushion, and if you enter a dearer loan, it says that such a loan is usually paid off first.
A prepayment is a return equal to the loan rate: untaxed and free of market risk
Every złoty prepaid reduces the balance on which the bank charges interest. So you save exactly the loan's nominal rate, every year, until the end of the contract. That return is certain at the current rate, is not subject to the Belka tax and carries no management fee. This is why, for someone with a loan, the point of reference is the loan rate, not the rate on a deposit or a bond.
The nominal rate counts, not the APRC (RRSO). The APRC adds up every cost of the loan at the moment it is taken and serves to compare new offers. The commission on a loan you are already repaying was paid long ago; the cost of keeping the balance is the interest on it, plus insurance if the bank charges it on the remaining principal.
The commission is not entirely lost, though. On full early repayment the bank reduces the total cost of the loan by the costs attributable to the shortened period, including those paid up front (art. 39 of the Mortgage Credit Act, art. 49 of the Consumer Credit Act, after the Court of Justice of the EU ruling in case C-383/18). If you enter the commission, the calculator adds the pro-rata refund to the result of a full repayment.
The Belka tax and a break-even that depends on the horizon
Investment gains are taxed: 19% on interest, dividends and gains on sale (art. 30a and art. 30b of the PIT Act). A prepayment is not. For an investment to match a prepayment it has to earn more than the loan rate. The popular shortcut divides the loan rate by 0.81: for a loan at 5.85% that gives about 7.2% gross.
That shortcut is exact only for one year. If you pay the tax once, on sale after many years, the break-even is lower, because the deferred tax keeps working for you. For a loan at 5.85% the break-even is 7.05% over 5 years and 6.55% over 25 years. The calculator computes the break-even exactly for your horizon, and example 4 shows the whole table.
Costs come on top of the break-even: the fund's management fee, the broker's commission and currency conversion. The calculator subtracts them from the assumed gross return before it compares it with the loan. It describes the result with one of three sentences: the assumed return is below the break-even, so prepaying leaves more; it is above the break-even by less than the market risk premium and the difference in złoty is small, so it comes out almost the same; otherwise investing leaves more, with no guarantee. None of these sentences is advice.
Shorten the term or lower the instalment? At equal payments the result is almost the same
Polish guides show a huge gap between shortening the term and lowering the instalment: the same prepayment "saves" much more interest with a shorter term. That is true, but only because in the lower-instalment variant the difference saved each month vanishes from the account. If you set it aside the same way you would set money aside after an early payoff, both variants end with almost the same wealth.
That is why the calculator compares fairly: in every variant you pay the same amount each month for the same time, and at the end you look at net wealth, that is investments after tax minus the remaining debt. In example 1 the difference between shortening the term and lowering the instalment while setting the difference aside is 1,671.71 zł, despite a large difference in the interest saved.
The differences are practical, not arithmetic. A shortened term cannot be lengthened again without the bank's new consent. A lower instalment is a built-in buffer against rising rates or falling income. Some banks charge for the annex that shortens the term according to their fee table, while lowering the instalment is usually free. The third variant, a lower instalment while you keep paying the old amount, gives the effect of shortening without an annex, but it takes discipline every month.
IKE and IKZE next to a prepayment
In an IKE the gain is tax-exempt if you withdraw after age 60 (55 with pension rights) and contributed in at least 5 calendar years (art. 21 ust. 1 pkt 58a of the PIT Act). The break-even then drops to the loan rate itself plus costs. The yearly IKE contribution limit in 2,026 is 28,260.00 zł; a larger surplus waits for the next year.
An IKZE works differently. You deduct the contribution from income, so in the year of the contribution you get back 12%, 19% or 32% depending on your tax. On withdrawal after age 65 and 5 years of contributions you pay 10% on the whole amount (art. 30 ust. 1 pkt 14 of the PIT Act). The limit in 2,026 is 11,304.00 zł, for the self-employed 16,956.00 zł. The calculator treats the tax refund as a separate cash flow: you receive it roughly a year later and can invest it, and you enter your own PIT rate, because we do not guess it.
A loan prepayment does not use up the IKE or IKZE limit. So you can do both in a proportion of your choice. From 2,027 there is also the personal investment account (OKI), which exempts part of your assets from tax; we will add its parameters once the rules are in force.
Cash loans, cards and overdrafts: here there is usually little to compute
Example 3 shows a cash loan at 10.25%: for an investment to end higher than a prepayment it would have to earn 12.48% a year gross for 5 years, which is more than the long-run averages for equities. Here the calculator is needed mainly for one thing: the order of repayment, if you have several such debts.
A fee for early repayment of a consumer loan is rare; we cover it in the section on fees. On full repayment a pro-rata refund of the commission is due. "0%" instalment plans carry no interest, so there is nothing to prepay; only check that they carry no hidden fee.
Inflation and "but the flat is appreciating"
In the calculator inflation is the switch "Show in today's money", which divides both results by the same rate: 3.6% a year, the 2025 average inflation according to GUS. The order of the results doesn't change; the scale does.
The rise in the flat's value cancels too: you own the flat in both variants, prepaying and investing. A lower loan-to-value ratio (LTV) can be a reason to prepay, for example to lower the margin or end the low-deposit insurance, but that is a term of the contract, not a result of the return.
Whether flats really are getting more expensive is better checked on transaction prices than on asking prices. A listing shows what the seller wants, a notarial deed what someone actually paid. Past price growth is not a forecast and does not change the calculator's result. Prices from notarial deeds go into the real estate price registers kept by the cities. What flats actually sold for in a given building, on a street and in a district, with the year-on-year change, in Poland's largest cities is shown by the Polish-language service iledom.pl.
Risk and liquidity: how often investing won, and what a prepayment does not give back
Liquidity is asymmetric. A prepayment cannot be undone, and money cannot be taken out of a flat without a new loan. An investment can be sold within days, though not necessarily at a good price. There are currently no statutory credit holidays, so liquidity has to come from the cushion. That is exactly why the cushion matters more before a prepayment than before an investment.
What the calculator does not compute, and why it does not advise
The calculator does not forecast returns, interest rates or inflation: those are your assumptions, each labelled as an assumption. It does not know your contract: the fixed-rate fee, insurance and the annex cost are yours to enter. It does not compute creditworthiness, the effect on BIK, the interest relief for loans from years ago, or leasing. It does not compute the costs of keeping a flat, renting, or the "second flat" variant.
It doesn't advise, because the answer depends on things the numbers don't hold: how much market and rate risk you want to take on, how long you want to have a loan, what you will do with a lower instalment. The result is one of three sentences, the difference in money on your assumptions, and a band from a cautious to a bold earning instead of one number. The decision is yours.
The statutory limits and the indices shown on this page carry a source and a date: a statute article, an index fixing, an announcement of a limit. The methodology version and the data version are shown under the result, and changes are recorded in the methodology history. If you see an error, report it: we will correct the data and record the change.
