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jroth has explained it well. You have 'earned' or avoided in paying the interest rate on your mortgage. On a loan of $250k, at 6.5% this is $16,250. If you are looking to invest your money to earn an after tax return of $16,250, you will need to earn $25,793 gross return (10.3% on $250k)...

With regards to the exact tax position in the second part of your example, we would need to confirm the tax paid for the fy. However, for illustrative purposes, of you earned $120k as a PAYG earner, and were paid monthly the example would be as follows. $10,000 gross pay with $2,886 deducted...