Two uses for spare cash
Pay off the home or invest calculator.
The same spare money each month, put to two uses side by side: extra repayments on your home loan, or an investment property. The tool opens on an example, so change any figure to your own.
Gap between the two
$1,477,413
How far apart the two paths finish at the end of the term, on these assumptions. A gap is not a recommendation.
Pay down the home loan: Net position at the end
$885,041
Invest in a property: Net position at the end
$2,362,454
In today's dollars
$704,346
The figure above in today's dollars, discounted for inflation at the rate you set, so you can compare it with money now.
This calculator is not intended to be relied on to make a decision about a financial product. Consider getting advice from a licensed financial adviser before you make any financial decision.
On these assumptions, the invest path finishes about $1,477,413 ahead after 30 years. That is an estimate on your figures, before the selling costs and capital gains tax a sale of the investment would bring, and it is not a recommendation.
On these figures, the investment costs about $2,039 a month more after tax than the spare money you entered. The tool adds that gap to the investment loan, so the loan grows.
The two paths side by side
| Pay down the home loan | Invest in a property | |
|---|---|---|
| Home loan cleared in | 18 years 11 months | 30 years 0 months |
| Home loan interest paid | $515,627 | $887,610 |
| Interest saved by paying extra | $371,983 | |
| Investment property value less its loan | $2,362,454 | |
| Net position at the end | $885,041 | $2,362,454 |
| In today's dollars | $421,937 | $1,126,283 |
Debt over time
Sources
- Federal Register of Legislation: Treasury Laws Amendment (Tax Reform No. 1) Act 2026, No. 49, 2026 (as made)
- ATO Legal Database: ITAA 1997 s 115-100 (discount percentage, as amended by No. 49, 2026)
- Federal Register of Legislation: Treasury Laws Amendment (Tax Reform No. 2) Act 2026, No. 71, 2026, Schedule 4 (negative gearing exceptions, from 2027-28)
- Parliament of Australia: Explanatory Memorandum, Tax Reform No. 1 Bill 2026 (Chapter 1 CGT, Chapter 2 negative gearing)
- ATO: Tax rates, Australian resident (2026-27 table)
- ATO: Personal income tax, new tax cuts (16% to 15% on 1 July 2026, then 14% on 1 July 2027)
- ABS: Lending Indicators, June quarter 2026 (released 14 August 2026)
- RBA: Statistical table F6, housing lending rates (August 2026, published 8 October 2026)
- ABS: Total Value of Dwellings, June quarter 2026, Table 1, mean price of residential dwellings (released 8 September 2026)
- Residential Tenancies Authority (QLD): bond statistics, median weekly rents, September quarter 2026
- ABS: Residential Property Price Indexes: Eight Capital Cities, December quarter 2021 (final release), Table 1
- ATO: Taxation Statistics 2023-24, individuals, Table 3 (published 17 June 2026)
- RBA: Statistical table F4, retail deposit rates, 1-year bank term deposit of $10,000 (September 2026)
Rates last checked 25 October 2026.
How it is worked out
- Your normal repayment is worked out from what you owe, the interest rate and the years left, as a principal and interest loan.
- On the pay-down path, the spare money is added to that repayment every month. The loan clears sooner, and the tool counts the months and the interest you would not pay.
- Once the loan clears, the full repayment you no longer make is set aside each month and grows at the return you entered, until the end of the original term.
- On the invest path, the home loan runs on its normal schedule. The tool assumes the whole purchase price is borrowed at the investment rate, interest only. A lender would usually want the equity in your home as extra security for a loan that size, and whether it would lend is not assessed. Buying costs are not counted.
- The property's net rent each year is its value at the start of that year times the net yield, so the rent rises as the value grows. Take off the interest and you have its yearly result before tax.
- A loss reduces your tax at your marginal rate, and a profit adds to it. From 1 July 2027, a net rental loss on an established home acquired at or after 7:30pm AEST on 12 May 2026, which for a purchase means contracted, can no longer reduce tax on your salary or other income, unless an exception applies; it can be used only against residential property income and gains, and the rest carries forward to be used the same way in later years. If you choose an established home, the tool applies this from 2027-28: a loss gives no tax effect that year, and it is carried forward against the property's later rental profit. If you choose a new build, a loss keeps reducing your tax.
- Each year the spare money meets the investment's after-tax cost. Any money left over goes off the home loan. If the spare money falls short, the gap is added to the investment loan.
- At the end of the term, the two paths are compared. Pay-down: the money set aside, with the home loan gone. Invest: the property's value less its loan, plus any money set aside, with the home loan also gone. Your home's value is the same either way, so it is left out of both.
What changes from 1 July 2027
From 1 July 2027, a net rental loss on an established residential dwelling acquired at or after 7:30pm AEST on 12 May 2026 can no longer reduce tax on salary or other income. This is now law. For a purchase, the date that counts is the date of the contract, not settlement. The loss can be used only against residential rental income and residential capital gains, and any excess carries forward to be used the same way in later years. Dwellings acquired before the cut-off, and new dwellings, are not affected, although what counts as a new dwelling has not yet been defined in law. Some dwellings acquired later keep an earlier owner's treatment, such as one inherited from a spouse or transferred on a relationship breakdown. Treat any result that uses this rule as an estimate, and confirm the position with your accountant.
Why these starting figures
The tool opens on example figures so you can see how it works. Rates and thresholds set by law are the published figures on the date shown. Every other starting figure comes with the reason it was chosen, and you can change any of them.
- Home loan owing
- Why this starting figure: the average new owner-occupier loan in Australia, June quarter 2026.
- Home loan interest rate
- Why this starting figure: the Reserve Bank's average rate on outstanding owner-occupier variable loans, as at August 2026.
- This starting figure is a current figure, as at the date shown, not a long-term average or a forecast, and it can change over the period.
- Years left on the home loan
- Why this starting figure: a new loan over the standard 30-year term.
- Spare money each month
- Why this starting figure: an example amount, because no published figure describes spare cash; enter your own.
- Investment property price
- Why this starting figure: the mean price of a residential dwelling in Queensland, June quarter 2026.
- Investment loan interest rate
- Why this starting figure: the Reserve Bank's average rate on new interest-only housing loans, as at August 2026.
- This starting figure is a current figure, as at the date shown, not a long-term average or a forecast, and it can change over the period.
- Net rental yield
- Why this starting figure: the Queensland median weekly rent on new bonds (Residential Tenancies Authority, $650, as at the September quarter 2026) over the mean Queensland dwelling price (ABS, June quarter 2026), less running costs of 40.9% of rent, the share in ATO rental statistics for 2023-24.
- This starting figure is a current figure, as at the date shown, not a long-term average or a forecast, and it can change over the period.
- Property growth a year
- Why this starting figure: the annualised growth, before inflation, in dwelling prices across Australia, not in Queensland alone, over the 20 years to June 2026. Two ABS series are joined at the December quarter 2021: the residential property price index for the eight capital cities, which adjusts for the mix of dwellings sold, from June 2006 until it ended in December 2021; then the mean price of residential dwellings across Australia, which covers the whole country and is not adjusted for mix, to June 2026.
- This starting figure is a long-term past average, not a forecast. A long period evens out strong and weak years, so it is a fairer starting point than recent years alone, but the future may be higher or lower.
- Your marginal tax rate
- Why this starting figure: the marginal rate, including the Medicare levy, of a person on the median taxable income for 2023-24.
- Return on money freed up
- Why this starting figure: the big banks' average 1-year term deposit rate (Reserve Bank, 5.00%, as at September 2026), less tax at a median earner's marginal rate of 32% including the Medicare levy.
- This starting figure is a current figure, as at the date shown, not a long-term average or a forecast, and it can change over the period.
- What you would buy
- Why this starting figure: an established home, because a purchase made now falls after the 12 May 2026 cut-off; change it if you are buying a new build.
- Inflation a year
- Why this starting figure: the midpoint of the Reserve Bank's inflation target band of 2 to 3%, the default rate ASIC's calculator instrument and RG 167.106 also set.
What this tool leaves out
- Buying and selling costs. Stamp duty, legal fees and agent fees on the investment property are not counted, which makes the invest path look better than it would be.
- Tax on a sale. The invest path's figure is before selling costs and capital gains tax; a sale would reduce it. Any rental loss still carried forward under the rules from 1 July 2027 would reduce the taxable gain, and the tool does not apply it.
- Risk. The invest path carries more debt for longer, and when the spare money falls short, the tool adds the gap to the investment loan, so that debt grows. Values can fall as well as rise, tenants leave and interest rates move, and the tool draws one smooth line, not the range.
- Whether a lender would approve the investment loan. Borrowing capacity is not assessed.
- Rent moving with value. The tool lifts the rent in step with the property's value each year. Rents and values often move at different rates, which could move the invest path either way.
- Depreciation. Deductions for wear on the building and its fittings are not counted, which can make the invest path look worse than it would be.
- The value of owning your home outright sooner, which some people weigh above any figure here.
Questions investors ask
Which path does the tool recommend?
Neither. It shows where each path may finish on the figures you enter. Small changes to growth, interest rates or the yield can change which one finishes ahead, so it is worth testing a few. Which suits you depends on your whole situation, and that is a conversation for your broker, accountant and adviser.
Why is my home's value left out?
Your home rises or falls the same way on both paths, so it cancels out. Leaving it out keeps the comparison on what actually differs: the debt, the investment property and the money set aside.
What is the return on money freed up?
On the pay-down path, the home loan clears early. From then until the end of the original term you no longer make repayments, so the tool sets that money aside at the return you enter. The same return applies to any money the invest path sets aside once both its loans are cleared. Use an after-tax figure, and change it to see how far it moves the result.
Does it include the negative gearing changes?
Gearing is borrowing to invest, and a property is negatively geared when its rent is less than its costs for tax, interest and depreciation included. From 1 July 2027, a net rental loss on an established residential dwelling acquired at or after 7:30pm AEST on 12 May 2026 can no longer reduce tax on salary or other income. This is now law. For a purchase, the date that counts is the date of the contract, not settlement. The loss can be used only against residential rental income and residential capital gains, and any excess carries forward to be used the same way in later years. Dwellings acquired before the cut-off, and new dwellings, are not affected, although what counts as a new dwelling has not yet been defined in law. Some dwellings acquired later keep an earlier owner's treatment, such as one inherited from a spouse or transferred on a relationship breakdown. Treat any result that uses this rule as an estimate, and confirm the position with your accountant. The tool applies the rule through What you would buy: for an established home, a loss from 2027-28 is carried forward against the property's later rental profit instead of reducing your tax.
What about an offset account?
Money in an offset account reduces the interest on your home loan much as an extra repayment does, while staying easier to reach. The tool treats the two the same. How your own offset or redraw works is a question for your lender or broker.
Why can the gap look so large?
Growth compounds, so over a long term a small change in the growth rate makes a large difference to the invest path. The same is true of the return on money freed up on the pay-down path. Real years are uneven; the tool assumes every year is the same.
What should I ask next?
Three questions to take to your broker and accountant. Would a lender approve the investment loan alongside your home loan? How would the property's rental result be taxed in your hands? And how much buffer do you want if rates rise or the property sits vacant?
Where to next
If you are weighing both paths with a real property in mind, we can work through them with you.
This calculator gives general information only. It estimates where two paths may finish on the figures you enter, with every rate and assumption held constant, so real results will differ, and it does not recommend paying down debt or investing. It is not tax, credit or financial advice, and apart from the figures you enter, it does not take into account your objectives, financial situation or needs. Past performance is not a guarantee of future results. Individual results vary. CHAD Property coordinates with brokers, accountants and planners and does not give tax, credit or financial advice, so speak with a licensed professional before you act.
The tools on this page give general information only. Each result is an estimate, worked out from the figures you enter and the assumptions shown, using rates and rules as at the date shown. It is not a quote, and it is not intended to be relied on to make a decision about a financial product, a loan or your tax. It is not personal financial, tax, credit or legal advice, and apart from the figures you enter, it does not take into account your objectives, financial situation or needs. Rates, thresholds and laws change, and some details of recent changes are not yet final. CHAD Property is a buyer's agency. It does not hold an Australian financial services licence or an Australian credit licence, and it is not a registered tax agent. We do not advise on tax, lending, financial products or how to structure ownership, including through a self-managed super fund, a company or a trust; we work alongside the brokers, accountants and financial planners who do. Before you make a financial decision, consider getting advice from a licensed financial adviser, and check any figure here with a licensed or registered professional who knows your situation.