Mortgage vs Super Calculator
Compare the long-term outcome of putting extra cash into your mortgage versus boosting your superannuation — and see which strategy works harder for your situation.
Mortgage effective return equals the interest rate (guaranteed, tax-free for owner-occupiers). Super return net of 15% earnings tax. Individual circumstances vary significantly.
Mortgage vs Super: The Core Trade-Off
Every Australian with a home loan and a super fund faces the same question at some point: when you have a little extra each month, where does it do the most good? Both options build wealth — but they do it differently, carry different tax treatments, and serve different goals. Understanding the mechanics helps you make a more informed decision for your situation.
The Mortgage Path: Guaranteed, Tax-Free Returns
Extra mortgage repayments reduce your principal, which in turn reduces the interest accruing on every future statement. For owner-occupiers, home loan interest is not tax deductible — so every dollar of interest you avoid keeping is a dollar of tax-free saving. If your interest rate is 6.2%, paying extra on your mortgage is the financial equivalent of earning 6.2% after tax with zero risk. That is a compelling benchmark.
Beyond the return, there is a behavioural benefit: a paid-off (or faster-paying-off) mortgage reduces financial pressure and can significantly shift your monthly cashflow once the debt is gone. For people within 10 years of retirement, eliminating the mortgage before stopping work is a priority many planners share.
The Super Path: Tax-Advantaged Compounding Over Time
Superannuation is the most tax-effective structure available to most Australians. Concessional contributions — whether employer, salary sacrifice, or personal deductible contributions — are taxed at 15% rather than your marginal rate. In accumulation phase, super fund earnings (dividends, rent, capital gains) are taxed at a maximum of 15% per year. In retirement phase, earnings on assets supporting an account-based pension are often tax-free entirely.
This tax advantage compounds over decades. A person on the 45% marginal rate effectively invests 85 cents in every dollar through super rather than 55 cents if investing outside it. Over 20 or 30 years, that difference in compounding power can produce dramatically higher balances.
When Mortgage Repayments Win
The mortgage path often makes more sense when your interest rate is high (above 6–7%), when you have fewer than 10 years to retirement and want to reduce fixed costs, when your super balance is already on track for a comfortable retirement, or when you simply value the certainty of a guaranteed outcome over a projected one.
When Super May Win
Super tends to produce a stronger outcome when you are more than 15 years from retirement (giving compounding time to work), when you are on the 37% or 45% marginal tax rate, when your expected super return is meaningfully higher than your mortgage rate, and when you have not yet reached your concessional contributions cap of $30,000 per year.
Concessional Cap Considerations
Any extra contributions into super via salary sacrifice or personal deductible contributions count against the $30,000 annual concessional cap (2025–26), which includes your employer's SG contributions. If you're already close to the cap, after-tax (non-concessional) contributions are an option but lose the upfront tax deduction. Always check your remaining cap room before routing extra money into super.