You've finally got a bit of breathing room. The kids are costing slightly less, or the pay rise landed, and there's money left at the end of the month. And now a question starts nagging at you every time you look at your loan statement: should that spare cash go into the mortgage, or into super?
It feels like it should have a simple answer. It doesn't — because it depends on your tax rate, your age, and how much you value being able to get at your money. But you can get to your answer by working through three things in order.
What paying down the mortgage really earns you
Every dollar you pay off your home loan stops interest being charged on that dollar. If your rate is, say, 5.5 per cent, that's a guaranteed 5.5 per cent return. No market wobble can take it away, and because you pay your mortgage with after-tax money, it's equivalent to earning even more before tax elsewhere.
Just as valuable is what banks won't put on a statement: flexibility. Money paid into an offset account or redraw is still reachable if the roof leaks, a job disappears, or a parent needs help. And there's the feeling — owing less on the family home helps many people sleep better, which is worth something no spreadsheet captures.
What the super tax break is worth
Super's advantage is tax. Money you salary sacrifice into super (or contribute personally and claim as a tax deduction) is generally taxed at just 15 per cent going in, instead of your marginal rate.
Say you earn $100,000. In 2026-27, each extra dollar you take as pay is taxed at 30 per cent plus the 2 per cent Medicare levy. Direct $10,000 of pre-tax salary to your mortgage and about $6,800 arrives after tax. Salary sacrifice the same $10,000 into super and about $8,500 lands in your fund after contributions tax. That's a $1,700 head start on every $10,000 — a 25 per cent boost before your super fund earns a cent. The higher your income, the bigger the gap.
There are limits. Concessional (before-tax) contributions — which include what your employer pays — are capped at $32,500 for 2026-27. If your total super balance was under $500,000 at the end of last financial year, you may also be able to use unused cap amounts carried forward from up to five previous years, which is a powerful catch-up lever for people whose contributions were patchy while raising a family.
The deciding factor: how far away is 60?
Here's the trade-off that settles most cases. The mortgage's return is smaller but flexible. Super's return is bigger but locked away: as a rule you can't touch it until you reach 60 and retire (or turn 65).
So the closer you are to 60, the stronger the case for super. A 58-year-old is only locking money up for a couple of years in exchange for that tax boost — and can then, if it still makes sense, withdraw a lump sum and clear the remaining loan. A 45-year-old is locking it up for fifteen years, through whatever redundancies, health surprises or family dramas those years hold. That doesn't make super wrong at 45 — it makes an emergency buffer outside super essential first.
Two more things belong on the scales. Super returns aren't guaranteed — a growth fund will have down years, and the tax advantage works alongside market risk, not instead of it. And superannuation rules are set by parliament, which likes to adjust them; that argues for keeping some balance between the two strategies rather than betting everything on one.
A middle path that works for many
This is rarely an all-or-nothing choice. A common-sense split for a 50-year-old couple might look like this: keep a solid buffer in the offset account — several months of expenses — then salary sacrifice enough to use a healthy share of the concessional cap, and direct anything beyond that to the loan. Each pay rise, tip a little more toward super. By the time work ends, the aim is a small (or cleared) mortgage and a super balance that has had years of tax-advantaged compounding — not one perfect account and one neglected one.
If you're behind on both
Maybe the mortgage is bigger than you'd like and the super balance makes you wince. Don't let that freeze you — the same logic applies, just start smaller. Even $100 a fortnight salary sacrificed at age 47 has well over a decade to compound. Check whether the carry-forward rule applies to you before a bonus or inheritance arrives, because it can let you shelter a lump sum from a much higher tax rate. And watch the things that quietly change the answer: your interest rate at each refinance, the contribution caps each July, and any change to your income that shifts your tax bracket. A decision made once and never revisited is the only real mistake here.
Noel Whittaker has spent four decades helping Australians make exactly these decisions with confidence. His classic Making Money Made Simple (26th Edition) covers debt, compounding and building wealth step by step, updated for the current financial year — buy direct from the author for $16.99, delivered instantly as PDF + EPUB.
This article is general information only and doesn't take account of your personal circumstances. Figures are current at time of writing and change each financial year. Consider seeking advice before acting.