Tax time could be the key to chipping more from your home loan while awaiting another rate cut from the Reserve Bank.
While many households with a mortgage still have more than half a million dollars to pay off, tax time windfalls have not proven to be a hit when it comes to tackling repayments.
Aussies are expecting a significant cash boost this end of financial year, with ING research showing the average anticipated refund is sitting at $1,177.
Despite this, just 12% are planning to put their tax return money towards paying off their home loan – a significant missed opportunity to save on interest payments.
The findings come as the Reserve Bank failed to deliver the expected 0.25% rate cut in July that could have helped those with a mortgage of $500,000 save around $80 a month.
Savings of $960 a year could go directly back into the pockets of homeowners with a $500,000 loan if lenders pass on a potential cash rate cut from the bank in August.
With average anticipated refunds this tax year sitting at $1,177 however, mortgage holders can get ahead of more than a rate cut's worth of benefits by putting their tax refund towards their loan repayments.
Instead, ING found 41% of Aussies are planning to add their tax return to their general savings, while 24% will be using it to cover general expenses.
Only 12% of Australians plan to put their tax return towards their mortgage. Picture: Getty
Just 14% expect to invest their tax refund dollars, while a mere 5% will add it to their superannuation balance.
“While it’s encouraging to see how many plan to save or invest their refund, the temptation to splurge is still strong for a significant number of people,” ING's head of consumer and market insights Matt Bowen said.
Over a quarter of Aussies expecting a tax refund have already spent it, the research shows.
“It’s clear many are counting on their tax refund as a financial boost,” Mr Bowen said. “With $1.8bn already spent, it’s a timely reminder of the importance of budgeting and planning ahead.”
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