It’s a question more Aussies have grappled with this year as early access to superannuation has been permitted for those who’ve seen their income drop due to COVID-19.
For some this has been a lifeline to cover living expenses – for others it’s provided a rainy day buffer. Many Aussies have put the money on their home loan or into savings.
So what’s the right decision?
It depends entirely on your personal situation. You absolutely should seek independent financial advice before making any decisions. Yes – that sounds like a disclaimer, but it’s also really sensible to get expert help for decisions that affect your financial future.
There are plenty of things to consider and Domain had a chat to a few finance boffins to come up with these thought-provokers.
- With home loan rates at historic lows, more of your repayments help reduce the principle so you can smash your mortgage sooner
- If your super fund is seeing returns far higher than your home loan interest rate then your cash will work harder for you in super
- Your age might determine whether you want to be free of a mortgage sooner or building a nest egg closer to retirement
- Your super contributions are taxed more favourably – at just 15 per cent
- If you come into a lump sum such as an inheritance it may be simpler to put it on your mortgage – giving you a rainy day redraw fund for emergencies and avoiding the tax implications of potentially exceeding the super contributions cap
- You might also consider paying down your own home and investing in a second property
Does property feature in your financial plan? Contact us for a chat.