Sydney family: extra super or pay down the mortgage faster?

You have a large Sydney mortgage, one child, and a steady monthly surplus you could send to either extra super contributions or paying the mortgage down faster. The "right" answer is rarely a single number - it depends on how much you value (1) the tax-advantaged compounding of super and (2) the guaranteed stress reduction of de-risking housing debt.

This scenario pack models a dual-income household starting in January 2026 at age 40, with $60,000 of liquid savings and a consistent $1,500/month surplus to allocate. It compares three strategies - Super first, Mortgage first, and Split surplus - under three different real return assumptions.

What the numbers show

How to read this: the simulator's capital is investable, liquid money. Home equity is not included, so the mortgage-first paths look "worse" in liquid terms even though they may leave you owning a bigger share of the home sooner.

In the Base return assumption (3.2% real), the super-first branch keeps the largest liquid cushion. The mortgage-first branch buys you debt reduction, but in this simulator it also means you trade liquid retirement capital for an off-model asset (your home). Even after lowering the mortgage-first retirement spending to $5,000/month, it still finishes with the smallest late-life buffer.

Compounding does most of the work in the second half of the timeline. By retirement (67), lifetime interest earned is about $589k in Base · Super first vs $404k in Base · Split surplus vs $219k in Base · Mortgage first.

What this comparison evaluates

• If you have $1,500/month spare, how much does sending it to super move the long-run retirement cushion?
• If you value certainty, how much does an accelerated payoff change the model's resilience (even if liquid "capital" looks lower)?
• Is a split strategy a better default when you want both mortgage risk reduction and retirement momentum?

How the costs are planned

These presets focus on the decision delta rather than trying to simulate every household bill.

• Mortgage paydown is treated as lost liquidity. The simulator does not track home equity or loan balances, so "extra mortgage repayment" shows up as an expense that reduces liquid capital. That is intentional: it makes the trade-off visible (liquid cushion vs debt reduction), but it also means mortgage-first will look worse than it would in a full net-worth model.
• Extra super is modeled as extra investing. The model does not calculate your marginal tax rate, contributions tax, or concessional caps. Treat this as "money that makes it into your retirement pot", then sanity-check it against ATO rules.
• Child costs are simplified into a net line item: a childcare window (net of CCS) and then a school-age activities window.
• Big irregular expenses are included on purpose (car replacement, renovation, a later-life care reserve) so "winning the comparison" does not depend on pretending life is smooth.

The strategy

Split surplus (the default)

Half the monthly surplus goes to extra super and half goes to paying the mortgage down faster. It's not mathematically perfect, but it is often the most liveable plan: you reduce rate-shock risk while still compounding meaningfully.

Mortgage first (stress reduction first)

All the monthly surplus goes to the mortgage, and the model assumes you clear the mortgage earlier. The key trade-off is that the simulator shows lower liquid capital, because it does not count the extra home equity you would build by making those extra repayments.

Super first (compounding first)

All the monthly surplus goes into super-style investing. This tends to win on liquid retirement capital in long-horizon cases, but it is the least helpful path if what you need is lower minimum repayments and a bigger cash buffer in the risky mid-life years.

Personalise it

When you open the preset, the fastest high-signal edits are:

• Match your mortgage reality: change the mortgage amount and end age to align with your loan balance, rate, and remaining term.
• Stress-test returns: compare 2.3% vs 3.2% vs 4.2% real, and watch how sensitive the ranking is.
• Zero out the Age Pension: if you think you'll fail the means test, set it to $0 and re-read the retirement budget.
• Make childcare your own: replace the net childcare number with your real weekly hours and out-of-pocket costs.
• Make the comparison fairer for your real household: if your priority is "pay the mortgage off earlier", lower retirement spending (or add a retirement-age one-time home downsizing inflow) so the model reflects the fact that housing costs change when the loan is gone.

If you're new to the simulator's metrics, start with Reading your results. To edit any entry timing or frequency, see Working with financial entries.

Australia-specific notes

• Super access is not immediate: super can be a better long-run engine, but it is not an emergency fund. If you do not already have a buffer, mortgage-first or split can be the safer practical default.
• Concessional contributions are capped and taxed: extra super only behaves like "tax-advantaged investing" if you stay within the relevant caps and use the right contribution type.
• Age Pension is means-tested: the $2,000/month line here is a planning anchor, not a promise. Use $0 / part / full-style settings to understand how much your plan relies on public support.

This scenario is an educational model, not financial advice. It simplifies Australian superannuation, mortgage mechanics, taxes, and eligibility rules so you can compare strategies and then verify details (rates, caps, and benefits) against up-to-date official guidance.