Most people ask us the same thing: should we pay off the house before we retire?
It’s a fair question. But the answer depends on the rest of your plan, and it’s rarely a simple either/or.
Paying off a home loan can feel like the finish line. Sometimes it is. Sometimes the same money can do more work somewhere else.
My example shows the point. An extra $20,000 a year put into super before retirement could save between $6k and $9k in tax. Paying the same $20,000 off the mortgage saves about $1,200 in interest.
That tax saving is the advantage. It can help pay off the mortgage more readily once you’ve retired and still leave you with more funds.
This example assumes a 47% marginal tax rate and a 6% home loan rate. It is for illustration only.
Before you act, there are three things to check: how much contribution room you have left after your employer’s super, whether Division 293 applies to your income, and when you’d need to access the money. Super is generally locked away until you retire, while money in an offset account stays within reach.
Super values can go up or down, and tax settings can change. Clearing a home loan also brings real peace of mind, which matters just as much as the numbers.
There’s no single right answer. The better question is how your mortgage, super and income fit together over the next few years.
If you’d like to talk it through, we’re happy to help.