Can I use my additional super contributions as a deposit for a house?

Can I use my additional super contributions as a deposit for a house?

One of the hardest parts of becoming a property owner is saving up enough of a deposit to secure a home loan. But thanks to the First Home Super Save scheme, if you are a first home buyer you may be eligible to put some of your superannuation towards your deposit. Here’s how.

What is the First Home Super Saver (FHSS) scheme?

The FHSS scheme came into effect in 2017 as a means to increase housing affordability for those entering the market. The scheme allows first home buyers to withdraw voluntary non-concessional (after-tax) superannuation contributions to use towards the purchase of their property.

Under the FHSS scheme, eligible participants can withdraw up to a maximum of $30,000 of their voluntary non-concessional superannuation contributions. To obtain the full $30,000, contributions would need to have been made across multiple years as a maximum withdrawal of $15,000 from any one financial year applies.

Who is eligible?

To be eligible for the FHSS scheme you must:

  • have not previously owned property in Australia (unless you are deemed to have been affected by financial hardship);
  • be over the age of 18 to apply for a release (however, you can commence making voluntary contributions from any age);
  • either live or intend to live in the premises you are purchasing for at least six months within the first year that you own it;
  • not have previously requested a release of superannuation through the FHSS scheme.

Each applicant is assessed individually. So, if you and your partner or a family member with whom you’d like to buy with are both prospective first home buyers, you may both be eligible to take part in the scheme.

I have previously owned a property in Australia. Am I eligible for the FHSS scheme?

If you have previously owned property in Australia you may still be eligible for the scheme if the Australian Taxation Office (ATO) determines that you suffered a financial hardship that caused you to lose ownership of that property. Financial hardship may include bankruptcy, divorce or separation, loss of employment, or illness, which you will need to be able to prove to be deemed eligible.

How do I apply for the FHSS?

You can apply to take part in the FHSS through the ATO. They will assess your eligibility to have your superannuation released.

How long does it take for the funds to be released?

After you have made the release application it will take between 15 and 25 business days to receive the funds, so it is important that you factor delays into your plans. Further delays may be experienced at the end of the year due to the Christmas and New Year's Eve shut down period and public holidays.

It is a good idea to commence the release process at the same time you start to seek approval for a home loan.

You must make an application for release within 14 days of signing a contract (after being approved for the scheme).  

Will the lender recognise my super as genuine savings?

The FHSS scheme is a well-known, government-backed scheme that is recognised by lenders. In addition to the FHSS, you may also be eligible for other first home buyer incentives in your state that your bank or lender will also be aware of.

What else do I need to know about the FHSS scheme?

Other important points about the FHSS scheme include:

  • Application to and approval for the FHSS scheme must be granted by the ATO.
  • Approval must be received prior to signing a contract for the home you intend to purchase.
  • Only voluntarily superannuation contributions can be withdrawn as part of the FHSS scheme. Superannuation guarantee contributions that have been made by your employer cannot be released under the FHSS scheme. Nor can spouse contributions.
  • The home you buy or build must be located in Australia.
  • Knowingly providing incorrect information will usually mean that your funds are returned to your super fund.
  • If you make an error, you may apply for another determination if you have not already signed a contract or requested a release of funds.
  • Applicants may only apply for the FHSS scheme once.
  • You must account for the amount you receive from your super in your tax return for the financial year the release falls in.

If you are considering applying for the First Home Super Saver scheme and are unsure about your eligibility or how the process works, our experienced Mortgage Brokers can assist. Give our team a call on (07) 4052 0750.