General information only — not financial advice. This content is intended as educational guidance. Consult a qualified financial adviser, mortgage broker, or legal professional before making financial decisions. See our full disclaimer.
It's the question that dominates every Australian personal finance discussion: should you throw every spare dollar at your mortgage, or invest in shares, ETFs, or super? The answer depends on your interest rate, tax bracket, risk tolerance, and personal goals - but the maths give
At current rates (~6.2%), paying off your mortgage provides a known, tax-free 6.2% return. ETFs have historically returned 9–10% including dividends, but this is an average with significant year-to-year volatility. After tax, ETF returns may net 6–8% depending on your bracket. For risk-averse homeowners at current rates, mortgage payoff is generally considered the lower-risk option. A hybrid approach - offset buffer first, then splitting between extra repayments and investing - is a strategy many borrowers explore.
To beat a 6.2% mortgage (which is a tax-free return), you need a pre-tax investment return of approximately 9.5% at the 37% tax bracket, or 11.8% at the 47% bracket. This is possible over the long term with shares, but not certain in any given year. Franking credits on Australian shares reduce this hurdle somewhat.
Super salary sacrifice up to the $30,000 concessional cap is often viewed by advisers as a tax-efficient starting point. Contributions are taxed at 15% (vs your marginal rate of 32.5%–47%), and the tax saving alone can be $5,000–$10,000/year. However, super is locked until preservation age, so balance it with accessible savings in your offset and mortgage payoff.
Use our free calculator to get personalised results based on your specific situation. No sign-up required.