Extra repayments vs super contributions.
Better option after years
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Super (after 15% tax, grown)
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Mortgage (after-tax cash, grown)
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Your breakdown
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One spare dollar, two very different journeys
This is the question I get asked most by clients in their thirties and forties who have finally found some breathing room in the budget. You have a bit of extra cash each year. Do you hurl it at the home loan to be debt free sooner, or do you salary sacrifice it into super and let the lower tax rate do the heavy lifting? The two paths are not the same dollar. Money headed for super goes in before income tax, so the only haircut is the 15 percent contributions tax. Money headed for the mortgage has to survive your full marginal rate first, then it goes to work. That single difference, where the tax is taken, is what this calculator is really measuring.
Why super starts with more in the tank
Take a higher earner on a 39 percent marginal rate, which under the 2025-26 resident scale is the 37 percent bracket above $135,000 plus the 2 percent Medicare levy. Say they have $15,000 of pre-tax income to direct each year. Send it to super and it is taxed at 15 percent, leaving $12,750 invested. Send it to the mortgage and it is first taxed at 39 percent, leaving only $9,150 to reduce the loan. Super begins the race $3,600 in front on the very first dollar. The mortgage side fights back with a guaranteed, tax-free return equal to your loan rate, but it is starting from a smaller base. Whether it catches up depends on the gap between your super return and your mortgage rate, and on how many years you give it.
Fifteen thousand a year for twenty years
Here is the default scenario the tool runs: $15,000 of spare pre-tax income, a 39 percent marginal rate, a 6.0 percent mortgage rate, a 7.0 percent super return, over 20 years. The calculator grows the super contribution at the super return and the after-tax mortgage dollar at the loan rate, then compares the two end balances.
Super wins comfortably here, but read why before you act on it. Part of the lead comes from keeping the full pre-tax dollar, and part comes from compounding at 7 percent rather than 6 percent. Narrow that return gap or push your loan rate higher and the bars move toward each other.
What the comparison deliberately leaves out
Two simplifications matter. First, the tool ignores the 15 percent tax on super fund earnings, so the real super figure would be a touch lower than shown. Second, and more important, it ignores liquidity. Money in super is locked until your preservation age, currently 60 for anyone born after June 1964. Mortgage repayments, by contrast, free up cash flow and reduce a debt you can never be forced to keep. There is also a smart middle path the calculator does not model: an offset account. Parking the same money in an offset captures the full interest saving of an extra repayment while leaving every dollar available to withdraw, which is why many advisers reach for it before locking funds away.
Who should lean which way
If you are a high earner with a stable job, a long horizon, and no plans to touch the money before 60, the super path is hard to beat on pure tax efficiency, and the $30,000 concessional contributions cap gives most people plenty of room. If your income is variable, your emergency buffer is thin, or you might need the cash for a renovation or a career break, the guaranteed return and flexibility of the mortgage or an offset usually wins on a risk-adjusted basis. A practical tip: do not treat this as all or nothing. Splitting the spare cash, some to super for the tax break and some to the loan for peace of mind, is what most of my clients land on once they see both numbers side by side.
Common questions
Does paying down the mortgage ever beat super for a low earner?
Often, yes. If your marginal rate is only 16 or 18 percent, the tax saving from salary sacrifice is tiny, because super is taxed at 15 percent and you are barely above that. The guaranteed, tax-free return from clearing a 6 percent loan can then outweigh a modest super advantage, and you keep full access to the benefit. The super case strengthens sharply once you move into the 30 percent bracket and above.
Can I claim a tax deduction for the super contribution?
If you salary sacrifice, the contribution is made from pre-tax pay so the benefit is built in automatically. If instead you contribute from your take-home pay, you can lodge a notice of intent with your fund and claim a personal deduction, which produces the same outcome. Either way the contribution counts toward the $30,000 concessional cap, alongside your employer's 12 percent super guarantee.
What if interest rates rise after I decide?
A higher loan rate lifts the guaranteed return on extra repayments and tilts the result toward the mortgage, while leaving the super side unchanged. The fix is simple: rerun the tool with your new rate. Because the mortgage return is certain and the super return is only an assumption, many people give the mortgage side the benefit of the doubt when rates are climbing.