Top tips for investing smartly – Super vs. Mortgage

We get asked many times every week “should I repay debt or contribute to super with my excess funds?” The answer is of course very personal and many factors need to be considered when reviewing these two options.

These are a few things to consider when choosing either your super or your mortgage to invest additional funds.

• The time remaining on your loan. On a 30-year mortgage, savings in the early years will have a much larger impact than towards the end. You will benefit from having to pay less, longer. Equally, if you are investing for a long period time, the compounding benefits of investments mean extra capital invested early will have significant benefits over a long period of time.
• Your interest rate. You will want to take into account how much you would save in interest by further reducing your loan. Your interest rate is calculated daily. You can compare this saving to what your expected return is should you invest further in super?
• When you will need to access the funds. If you put money into your super it is restricted until you meet a condition of release. Alternatively, there are ways to access funds with a home loan through offset or redraw programs.
• Tax benefits. There are no tax benefits to paying off a home loan early but there could be by adding extra into your super.

Your future self will thank you for talking to a professional in the field and we are here to help you with all your borrowing needs. Speak to one of advisors if this is a question you face and want help resolving.