Why?
All I'd have to make is greater than 1.24%.
I'm being charged 1.24%. if I made 2% I'm still up. If I make 1.3% I'm still up.
A mortgage is no different to a loan. All I need to do is beat the rate of interest which is a measly 1.24%.
Let's say my investments only make 1.24% year on year. I simply break even.
Even Warren buffet Berkshire Hathaway has made 12% on average over the past 20 years. So if I invest in his company and it follows even half the performance it's had over the past 2 decades I'm laughing.
I made a rough estimate of £245k outstanding if the mortgage was ~£1400 over 16 years.
Using a mortgage amortisation table, after 5 years paying £1400 a month at 1.24% on a 16 year term, there will be ~£173k remaining on the mortgage balance. Doing the same on a 32 year term, paying ~£780 per month, the remaining balance will be ~£213k after 5 years.
So you've got to make roughly £40k using the ~£620 you're not paying on mortgage payments to break even.
Using a compound interest calculator, investing that £620 per month, you'd need roughly a 2.5% return to earn £41k over 5 years, assuming inflation at 1% and only ever using the £620, not increasing it with inflation. So lower than my original estimate but not 1.24%
(Originally I was using your figures of ~£1400 for a 16 year term and £900 for a 32 year term. Having checked a mortgage calculator, 32 years is much less so more to invest monthly, bringing the returns needed to break even much lower.)
Obviously 2.5% is relatively easy to get currently and inflation is way below 1% so it's not a big deal, it's just highlighting that its not always a cut and dry choice.
Even at 5% returns, it's a 'profit' of £60 a month over the 5 years. A nice amount I agree, but many people would be happy to pay that for the peace of mind of not having to worry about managing a portfolio of investments or changes in the economy that would negatively impact them.