Can I Use My Super to Pay Off My Mortgage? A Guide

March 7, 2023

 

Are you looking for a way to pay off your mortgage faster? Have you considered using your superannuation to do so? It may sound like a strange idea, but it is possible to use your super to pay off your mortgage. In this guide, we’ll explore the pros and cons of using your super to pay off your mortgage, and provide you with some tips for making the most of this strategy.

 

 

What is Superannuation?

 

Superannuation, or “super”, is a type of retirement savings account in Australia. It is funded by employers, who are required to contribute a certain percentage of their employees’ salaries into a super fund. The money in the super fund is then invested and can be accessed when the employee reaches retirement age.

Couple holding a key

 

Can I Use My Super to Pay Off My Mortgage?

 

 

Yes, you can use your super to pay off your mortgage. This is known as a “superannuation loan”, and it is a way to access the money in your super fund without having to wait until retirement. It is important to note, however, that this is not a traditional loan. Instead, it is a loan from your super fund to you, and it must be repaid within a certain timeframe.

 

 

Pros and Cons of Using Super to Pay Off Your Mortgage

 

Using your super to pay off your mortgage can be a great way to save money in the long run. Here are some of the pros and cons of this strategy:

 

Pros:

 

• You can access the money in your super fund without having to wait until retirement.

• You can pay off your mortgage faster, potentially saving you thousands of dollars in interest payments.

• You can use the money in your super fund to invest in other assets, such as property or shares.

 

Cons:

 

• You may be charged fees for accessing your super.

• You may be required to pay taxes on the money you withdraw from your super fund.

• You may be required to pay back the loan within a certain timeframe.

Tips for Using Super to Pay Off Your Mortgage

If you’re considering using your super to pay off your mortgage, here are some tips to help you make the most of this strategy:

• Make sure you understand the fees and taxes associated with accessing your super.

• Make sure you understand the repayment terms of the loan.

 

• Make sure you have a plan for how you will repay the loan.

 

• Make sure you have a plan for how you will invest the money you save by paying off your mortgage faster.

• Make sure you understand the risks associated with using your super to pay off your mortgage.

 

Using your super to pay off your mortgage can be a great way to save money in the long run. However, it is important to understand the fees, taxes, and repayment terms associated with this strategy. It is also important to have a plan for how you will invest the money you save by paying off your mortgage faster. If you’re considering using your super to pay off your mortgage, make sure you understand all the risks and rewards associated with this strategy.

 

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January 3, 2024
The Australian Banking Association (ABA) has launched a campaign encouraging borrowers struggling with loan repayments to seek help, in a valuable reminder there are options available if you're finding it hard to keep up with your mortgage. Your bank may be able to: Reduce your home loan repayments. Pause your repayments temporarily. Switch your repayments from principal and interest to interest-only temporarily. Increase the length of your loan (thereby reducing the repayments). ABA CEO Anna Bligh said banks understood many borrowers were facing challenging circumstances. “Banks stood by their customers during the COVID-19 pandemic, deferring payments for people who for the first time in their lives found themselves unable to pay. Banks stand ready to help people again now,” she said. “People who are finding their finances are stretched should not feel they have no options and they have to do it on their own. Banks have dedicated, highly experienced teams ready to help.” As your broker, I'm also here to help. You're welcome to contact me for advice; I can then speak to and negotiate with your lender on your behalf. The key thing is to move fast, because the further you get ahead of the problem, the more flexible and helpful banks tend to be.

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