Do you mind if I change your focus and make your head spin with some "other" numbers?
I am considering something similar but looking at ~10 vs 25y.
This has been debated every day around here but more with the premise to pay off fast vs slow.
Doubling down payments on a 25y mortgage would have it paid off in about 10y.
Mathematically, ignoring the risk, extending the mortgage and investing is the better solution.
It looks like you are comfortable investing, so that helps you lean towards that option.
My question, in looking at my own numbers, was "how much better?"
I have not looked at your particular interest rates (mine were the same in both cases). But to really answer my question I also had to ask "How much other money do I have to invest?"
Spoiler! The more "other money" I had, the less of a difference the decision became 25y later.
Look at your entire budget and find out what your “other money” is to help answer the question.
My base Numbers
Mortgage $325K
Interest 3%
Payment on 25y $1537
Investment interest assumed 6% (Not guaranteed!)
Consider 4 scenarios:
1) Not a lot of "other" money (ie all you really have is the 25y mtg payment rounded up to the next $100, so $1600 in my case)
1a) Pay off MTG in 25y invest a little
1b) Pay off MTG as fast as possible, invest nothing then invest everything after 23y
2) Substantial "other" money (ie 2x the mtg payment or $3200 total to use every month)
2a) Pay off MTG in 25y invest a little + other money
2b) Pay off MTG as fast as possible, invest a little, then invest everything after 10.5y
RESULTS
Both (a) scenarios have more time for the investments to compound.
The investments I would have in the 1a case ($43K) are 38% greater than the 1b case ($26K)
The investments I would have in the 2a case ($1,152K) are 17% greater than the 2b ($959K) case
I ran it with $4800 total money (Dreaming!)
The investments I would have in the 3a case ($2.2M) are 8% greater than the 3b ($2.1M) case
At that point, 2.1M vs 2.2M, who really cares?
If you have little "other" money the % difference between 1a and 1b is larger and you are best to lengthen your mortgage.
If you have lots of "other" money the difference between 2a and 2b is not that big of a deal so just do what you are more comfortable with.
The other really important thing to see is that you should try to find that “other” money. Because Case 2a is a freaken million dollars, vs Case 1a is just $43 thousand. Doubling your savings rate over those 25y, regardless of if you put it into the house or investments, will result in 25 to 35 times more money!!
Saving that “other” money is what makes rich Mustacians.