The trade-off in one line
Extra mortgage repayments save interest at your loan rate, tax-free, for as long as the rate stays the same, and keep the money reachable (through redraw or offset). Extra super contributions may be taxed less and invested for longer, but the money is locked away until you meet a condition of release, generally from age 60.
Worked example (illustration only)
Sam earns $110,000. Sam has $10,000 of pre-tax pay to direct either way, a 6.0% home loan, and assumes (not promises) super earns 6.0% a year before tax on earnings.
| Mortgage | Super (salary sacrifice) | |
|---|---|---|
| Tax on the $10,000 | 30% + 2% Medicare = $3,200 | 15% contributions tax = $1,500 |
| Amount working for Sam | $6,800 | $8,500 |
| First year benefit | About $408 interest saved (6.0%), tax-free, while the rate stays at 6.0% | About $434 growth (6.0% less 15% tax on earnings), not guaranteed |
| Access | Through redraw or offset | Generally from 60 when retired |
Super starts with more money because of the tax gap, but the mortgage saving does not depend on markets and stays reachable. Change the interest rate, the return assumption or Sam’s tax rate and the answer can flip.
What tips the balance
- Age and time to retirement: the closer you are to 60, the less the lock-up matters.
- Your buffer: without an emergency fund, flexibility is worth a lot.
- Your tax rate: the higher it is, the bigger the super tax gap (until Division 293 applies).
- Your caps: concessional contributions are capped at $32,500 for 2026–27, including employer super.
- Job security and family plans.
Try the numbers yourself with our super growth and loan repayment calculators.
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Quick answers
Is it better to pay off the mortgage or put money into super?
It depends on your tax rate, interest rate, age, buffer and goals. Super can be more tax-effective but is locked away; mortgage repayments save interest at your loan rate and stay reachable through redraw or offset.
Can I do both?
Yes. Many people split extra money between an offset account and salary sacrifice, and review the split as they get closer to retirement.
Sources
General advice warning. This article is general information only and does not take into account your objectives, financial situation or needs. Rules and thresholds change; check the sources above. Past performance is not a reliable indicator of future performance. Consider the relevant PDS and our Financial Services Guide and seek personal advice before acting. FinForce is authorised under Financial Force Pty Ltd AFSL 238337. Shay has been authorised since 18 October 2011.