This is the classic Swedish money question, and the one that lodges longest in the mind. Paying down feels safe and grown-up; investing feels smart and forward-looking. Both are good things to do with money, which is exactly why the choice is hard. But once I strip away the feelings it comes down to a fairly clean comparison: a guaranteed return against an expected but uncertain one.
Paying down the mortgage gives a guaranteed return equal to your mortgage rate after the interest deduction, often somewhere around 3%. The market has historically given more, around 7% a year before inflation, but with no guarantees and with swings along the way. If your loan-to-value is high or the debt keeps you up at night, start by paying down. If your loan-to-value is low, your buffer is in place and your horizon is long, investing usually wins. For most people the truth is somewhere in between: do both.
I walk through why it is really only extra amortisation that is a choice, how to work out the guaranteed return, what the market realistically gives, when loan-to-value flips the calculation, and why peace of mind is a return in itself. Run your own loan in the mortgage calculator and your saving in the savings calculator.
It is only extra amortisation that is a choice
First an important boundary. The amortisation requirement you already have is not optional. With a new mortgage at a high loan-to-value you must repay 1 or 2 percent of the loan a year. (The extra percent for debt above 4.5 times your gross income was scrapped on 1 April 2026.) That part you do regardless. The question in this guide is therefore only about the extra kronor, the ones you can freely choose to put against the loan beyond the requirement.
This matters, because the required amortisation is already building up savings in your home for you. What you are debating with yourself is where the next voluntary krona does the most good.
The guaranteed return
Every krona you pay down stops costing interest. That is your return, and it is entirely guaranteed. But work with the rate after the interest deduction: the state gives back 30% of the interest cost up to a 100,000 kr deficit, 21% above that. A mortgage rate of 4.0% therefore becomes, in practice, 4.0 × (1 − 0.30) = 2.8% after tax. That is the return you lock in by paying down, risk-free and tax-free.
The point of including the interest deduction is that it makes paying down less attractive than the raw rate first looks. And the lower your rate, the lower the guaranteed return, and the stronger the case for investing instead.
The uncertain but higher return
On the other side of the scale is the market. A broad global index fund has historically given around 7% a year before inflation, maybe 4 to 5% real. That is clearly more than the 2.8% from paying down. But, and it is a big but, that figure is an average over a long time. Individual years can be deeply red, and compounding needs decades to do its work.
On paper the market therefore almost always wins the pure maths, as long as your rate is not unusually high. But maths that assumes you sit still for twenty years is only true if you actually do. That is where the rest of the calculation comes in.
Loan-to-value can flip the calculation
Paying down sometimes does more good than just the saved interest. Get below 70% loan-to-value and the heavier 2% amortisation requirement disappears, and below 50% the last 1% requirement goes too. That frees up cash flow every month. Many banks also offer a better rate at lower loan-to-value, so an extra payment that takes you over such a threshold can give a return higher than the rate itself.
If you are already low, say under 50%, there are no such thresholds left to aim for. Then extra amortisation is just the pure interest saving, and investing becomes more attractive.
Peace of mind is a return too
This is the part that shows up in no calculation, and yet often the most important. A smaller debt is a smaller worry. If a rate rise or a job loss would leave you sleepless, paying down is a perfectly rational choice even when the maths says market. Security has a value, and being able to sit still through a market drop without panic is itself what makes the long-run return real.
The only thing I warn against is paying down your whole buffer. An emergency fund of a couple of months of expenses comes before both extra amortisation and investing. Money paid down is hard to get back quickly; you cannot fix an urgent car repair by un-paying a mortgage.
My rule of thumb
Here is what I do myself, and what I advise others to do: have the buffer first. Handle the amortisation requirement you have. If your loan-to-value is high or your rate is unusually expensive, put the extra kronor on paying down until you get under a threshold. After that, with low loan-to-value and a long horizon, I let the market take over, because the expected return there is higher. And honestly: for most people the best answer is to do both at once. You do not have to pick a side to win.