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Extra Super vs Extra Mortgage Repayments

Model whether your spare cash works harder inside superannuation or paying down your home loan — accounting for tax, compounding, and preservation rules.

Your Details

AUD
AUD
yrs
yrs
AUD
% p.a.
yrs
%
Super path: Salary-sacrifice contributions taxed at 15% (concessional rate) instead of your marginal rate — net extra invested in super = extra × (1 − 0.15). Concessional cap 2025–26: $30,000 (incl. employer SG). Funds compound until preservation age, then drawn as income taxed at your marginal rate less a 15% offset.
Mortgage path: Extra repayments reduce principal; interest saved is guaranteed at the mortgage rate, after-tax (no tax on savings). Mortgage paid off early — remaining years' repayments become free cash flow.

Extra Super

Super balance boost at preservation age
$0

Extra Mortgage Repayments

Total interest saved
$0

Which wins for your situation?

How to think about this decision

The core trade-off is simple: super earns tax-advantaged returns that compound over time, while extra mortgage repayments earn a guaranteed after-tax return equal to your interest rate. The super path usually wins mathematically when your marginal tax rate is high (making concessional contributions very efficient) and when you have a long runway to preservation age. The mortgage path wins when the interest rate is high relative to super returns, or when financial security and cashflow freedom matter more than maximising wealth.

Key factors favouring super: high income (≥$120k, marginal rate 37–45%), long time horizon (15+ years to preservation), super return assumptions above mortgage rate, and existing large mortgage buffer (redraw/offset available). Key factors favouring the mortgage: high interest rates, approaching retirement in under 10 years, need for liquidity before 60, or psychological value of being debt-free.

Many Australians split the extra money — for example, directing enough into super to hit the concessional cap while using the rest for extra repayments — to capture both benefits.

FAQ

What is the concessional contributions cap for 2025–26?
$30,000 per year, including employer SG contributions (12% of ordinary time earnings). If your employer pays $14,400 SG on a $120k salary, you can salary-sacrifice up to $15,600 more before hitting the cap. Unused cap amounts can be carried forward for up to five years (if your total super balance is under $500,000).
Can I access super before preservation age?
Only in very limited circumstances: severe financial hardship, compassionate grounds, terminal medical condition, or permanent incapacity. From age 60 (for most people born after June 1964), you can access super tax-free once retired. Unlike a mortgage offset, super is locked away — factor this liquidity difference into your decision.
Is the mortgage interest saved really "guaranteed"?
Effectively yes — every dollar off your principal definitively saves interest at your loan rate, risk-free. Super returns are not guaranteed; the 7–8% long-run average includes years of negative returns. If you're risk-averse, the certainty of the mortgage saving has real value beyond the headline number.
Does an offset account change the answer?
An offset account lets extra cash reduce mortgage interest while remaining fully accessible — combining the guaranteed mortgage interest benefit with full liquidity. If you have an offset account, it's often the best of both worlds and can compete strongly with salary sacrifice, especially for people who may need funds before preservation age.