When saving for a home loan deposit, most people allocate their additional savings to paying down their debt. The Government’s First Home Saver Accounts (FHSA) scheme was designed to assist Australians’s in saving money for their first home.
The scheme’s helps first time home buyers to save for their first home in an FHSA, by exempting them from paying tax on the money they put into the account and on any interest earned. The critical question to ask if you plan to buy your first home is, “can I use my super to buy a house as a first home buyer?” The following article answers all the related questions.
Why Invest in FHSA?
The benefit of an FHSA for first home buyers is that it enables them to use the money in the account to purchase a property or enter into a new long-term lease. The minimum requirement for someone to hold the account is to be a member of their super fund for atleast 12 months before being able to withdraw funds from their FHSA.
In addition to that, they must be under 50 years of age when applying to withdraw the money. They must also be able to show that they made the savings in addition to any compulsory super contributions. They will also be required to show that they have paid tax on those compulsory contributions.
This means a couple cannot use both partners’ FHSA funds as part payment for their home; they need to use different super accounts.
The FHSA can be a great way to save in a tax-effective manner, and in the long term, it could provide you with a substantial deposit for your property purchase or help finance a new lease.
Can You Use Super To Buy Your First Home?
If you have a first home saver account, it is essential to note that you can withdraw this money from the account only once. This means that any savings deposited into your FHSA account after the initial deposit will not be available to be withdrawn until after one year has elapsed from the first deposit.
This FHSA provision also applies if you decide to switch super funds. Any switching of accounts will mean that the new fund will also accumulate any interest on those additional funds. You cannot withdraw them until one year after the initial deposit is made.
Can You Use Your Super to Pay Down a Home Loan?
If you have a first home saver account, this question becomes more complex as you cannot use this money to pay down your home loan. If you have an FHSA account, the only way to access the funds is by withdrawing them as cash or reinvesting them into another FHSA account.
Can You Use Your Super Saver for a Deposit?
If you ask if you can use your super saver for a deposit, you can consider the following options.
- Are there any FHSA’s available with your super fund? If so, are they advertised as being suitable for first home buyers? If not, is there an option to open a new FHSA account? Or could you meet one of the other criteria mentioned above?
- If you cannot use your super saver for a deposit, consider the other options available to you. You could save with an offset account or invest in transaction accounts.
- The third option is to continue focusing on repaying debt so that your repayments will cover mortgage payments if required.
- Consider looking at second-charge loans available to first home buyers. These loans are secured on the family home, and they allow you to borrow up to 100% of what is required for your deposit.
If you are looking for an answer to the question “can I use my super to buy a house as a first home buyer?” then, whether or not it is possible will depend on the type of account you have. You can choose from several options, including using an FHSA account, offset savings accounts, and even second-charge loans available to first home buyers to make your property investment.