02/11/2026
WHAT CAN YOU DO IF YOUR MORTGAGE FOLLOWS YOU INTO RETIREMENT?
Entering retirement can seem a lot less satisfying when you’re dragging your mortgage across the finish line with you. But that doesn’t necessarily mean you need to put your retirement plans on hold. If you expect to retire with lingering mortgage debt, here are a few pathways you might want to consider.
Prioritise debt repayment before you retire
The first place to start is to ask yourself whether you have the ability to pay down your mortgage before you retire. There might be room in your budget to make extra repayments, upcoming bonuses that you can resist spending, or opportunities to refinance to a cheaper rate.
Use your super to tackle the debt
Another option is to wait until you can access your super (which you can typically do when you turn 60 and retire) and use those funds to help clear your debt. This usually means one of two things:
• You take out a lump sum and pay off a large chunk of the mortgage, if not all of it
• You use part of your retirement income to cover your mortgage repayments
If you plan to use a lump sum to wipe out your debt, keep in mind that you’re not just parting with that sum – you’re also giving up the money it might have generated in the future. Over time, those forgone returns could exceed the interest you’d save by paying off your loan.
Downsize your home
If your home seems far too spacious now that your kids have moved out, or you no longer have the energy to give it the TLC you lavished on it in the past, downsizing to a more appropriately sized – and cheaper – home could free up enough money to reduce or even eliminate your mortgage altogether.
There might also be an opportunity to boost your retirement savings at the same time. If you’re at least 55 when you sell your home, you might be able to contribute some of the sale proceeds (up to $300,000 for individuals and up to $600,000 for couples) into your super via a downsizer contribution.
Be strategic
Any other assets and income streams you have could potentially play a role too. For example, if you’ve reached or are approaching Government Age Pension age, using some of your savings to reduce your mortgage might increase your entitlement.
That’s because your principal home is generally exempt from the assets test. So when you take your savings and direct it to your mortgage, you’re effectively converting an assessable asset into an exempt one. Of course, this will depend on your personal circumstances, and it might be a good idea to speak to an adviser before you make any decisions.
You’re not alone
Finally, it’s worth keeping in mind that more and more Australians are carrying mortgage debt into their later years, whether due to career breaks, late in life purchases, or simply because property prices are a lot higher than they used to be.
So while entering retirement mortgage-free can be less stressful, carrying some debt into retirement doesn’t necessarily mean you’ve done something wrong or need to delay your plans. The important thing is understanding how your repayments will fit alongside your other income and expenses, and whether your debt remains manageable as you enter that next chapter.
For more information book a complimentary appointment with a My Fortress adviser.
https://www.myfortress.com.au/retirement-ready
4771 3800
