One of the most common financial dilemmas for Australians in their 30s and 40s: should you put extra money into super or into your mortgage? Both are powerful wealth-building tools, both offer tax advantages, and the "right" answer depends on your specific circumstances. Here's how to think about it.
The case for extra super contributions
- Tax advantages: Salary sacrifice contributions are taxed at just 15% instead of your marginal rate (up to 47%). On $10,000 contributed at a 37% marginal rate, that's a $2,200 instant tax saving.
- Compound growth: Super is a long-term investment that benefits enormously from compound returns. At 7% net returns, $10,000 contributed at age 35 grows to roughly $76,000 by age 67.
- Employer contributions already cover the minimum: Your employer pays 12% SG — extra contributions on top of this accelerate your retirement dramatically.
- Tax-free after 60: Everything you withdraw from super after age 60 is completely tax-free.
The case for extra mortgage repayments
- Guaranteed "return": Every extra dollar you pay off the mortgage saves you interest at your home loan rate. At a 6.5% rate, that's a guaranteed, risk-free, after-tax 6.5% return.
- Reduces stress: Owning your home outright eliminates your biggest expense in retirement and reduces financial anxiety.
- Liquidity: If you have a redraw facility or offset account, extra mortgage payments remain accessible. Super is locked until preservation age (60).
- No tax on your home: The family home is CGT-exempt — its value growth is entirely tax-free.
The maths: a worked example
Scenario: You're 35, earn $120,000, have a $500,000 mortgage at 6.5%, and $80,000 in super. You have $500/month extra. Where should it go?
| Option | Extra into mortgage | Extra into super (salary sacrifice) |
|---|---|---|
| Monthly amount | $500 | $500 ($575 gross, after 15% tax = ~$489 net) |
| Interest saved / growth over 10 years | ~$89,000 interest saved | ~$98,000 growth (at 7% net) |
| Tax benefit | None (after-tax dollars) | ~$1,650/year tax saving |
| Accessibility | Accessible via redraw | Locked until age 60 |
| Risk | Zero (guaranteed interest saving) | Market risk (returns not guaranteed) |
A practical approach
For most people, the optimal answer isn't all-or-nothing. Consider this framework:
- First: Make sure you're getting the full value of your concessional cap. If your employer contributes $14,400 in SG (12% of $120K), you still have $15,600 of unused concessional cap. Salary sacrificing even $5,000–$10,000 per year provides meaningful tax benefits.
- Then: Direct remaining extra cash to the mortgage — especially if your rate is above 6%. The guaranteed return from mortgage reduction is hard to beat.
- Exception: If you're over 50 and your super is below target, prioritise super aggressively — use carry-forward unused caps from the last 5 years (see our contribution caps guide).
Related guides
- Salary sacrifice into super
- Super contribution caps 2025–26
- Advanced contribution strategies
- First Home Super Saver Scheme
Important information
The information on SuperFind is general in nature and does not take into account your personal financial situation, needs, or objectives. It is not personal financial advice. Before making any financial decisions about your superannuation, consider whether the information is appropriate for your circumstances and consider seeking advice from a licensed financial adviser. Super fund data including fees and performance returns shown on this site were current as of April 2026 — always verify figures on the fund's website. Past performance is not a reliable indicator of future performance. Data sourced from APRA, ATO, and individual fund disclosures. SuperFind is a DecisionLab publication.