Should I repay my home loan or boost my super?

Both options make good financial sense - we look at some pros and cons to help you decide. 

If you’re approaching retirement – or even just beginning to think about it – you may find there’s a trade-off between getting your home loan paid off and building your retirement nest egg.

Adding money to super has its advantages and so does paying more on your home loan. So if you’ve got some extra cash, how do you choose which to channel it to, or should you do both? We help you weigh up the options.

All about interest

If you put extra into your super, you may have to wait a while before accessing it. But on the upside, if your retirement is some way off, you’ll benefit from compound interest, which is a powerful way to build long-term wealth.

Our super simulator can give you a sense of how much super you may need to retire and whether you’re on track.

Focusing on repaying your home loan will reduce your overall amount of debt, which will reduce the amount of interest you pay. If you’re able to repay your home loan completely, you’ll own a valuable asset that could provide you with greater financial comfort and security.

Check out our home and retirement planner to see how your home fits in with your plans.

What about tax?

As far as tax benefits go, you can contribute to super using before-tax dollars. This means:

  1. Less tax is applied to the portion of income going into super – currently 15%, or 30% if you earn more than $300,000 (reducing to $250,000 from 1 July 2017) per year, which is lower than most people’s income tax rate.
  2. As some of your salary is going directly into super, you’ll lower your taxable income and that could save you from paying higher rates of tax.

Learn more about the different types of super contributions or use our salary sacrifice calculator to find out how this would work for you.

With home loan repayments, you generally have to use after-tax dollars. However, there can be a tax advantage when you sell your home, as any profit is tax free.

When you come to withdraw your super, it can also be tax free, but only if you withdraw it after you turn 60 and if receive your super as an income stream.

Topping-up has its limits

Even though super can be a tax-effective way to build wealth, you may not be able to add as much as you’d like. The contribution limits are changing from 1 July 2017. Find out more here.

And when it comes to your home loan, check with your lender as there may be restrictions or fees for additional repayments.

Flexibility and accessibility

If your home loan offers a redraw facility you may be able to withdraw extra repayments you’ve made.

On the other hand, super provides less flexibility as far as access goes—the money is generally inaccessible until retirement. However, there is flexibility in how your money is invested, as you can change your investment options at any point in time.

Earnings and economic markets

The value of both your home and your super can be affected by economic changes—your super investment returns can fluctuate, while a variable loan interest rate can change, as can your home’s value.

So it’s best to seek advice about earnings and markets from your financial adviser. If you don’t have a financial adviser you can use our tool to find one, or call us on 131 267, Monday to Friday between 8.30am and 7pm (AEST).

What’s right for you?

Explore the super versus mortgage calculator on the MoneySmart website and have a look at our education module to decide if investing in your property or super is better for you. There’s a lot to consider—and you may not need to choose one option over another.


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It’s important to consider your particular circumstances and read the relevant Product Disclosure Statement before deciding what’s right for you. This information is general in nature and hasn’t taken your circumstances into account. 

This information is provided by AMP Life Limited. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice.  

The issuer of AMP Flexible Super is AMP Superannuation Limited ABN 31 008 414 104. 

Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.