Can I request an early release of super for mortgage payments?

Australia’s super laws allow the early release of super benefits if there are genuine, compassionate grounds. For instance, you can request super funds if you or your child require medical care or suffer a temporary or permanent disability. 

If you are facing severe financial hardship, you can also request an early release of super for mortgage payments. To qualify for this release, you’ll need to prove that you are in danger of losing the home if you don’t get the funds. You should find out about the amount you can withdraw for this purpose. 

Remember that you can only apply once for early release of super on these grounds and you can’t reapply if your request is rejected. 

How do I qualify for early release of super for mortgage payments?

You can request an early release of super benefits if your lender is threatening to repossess your home due to missed mortgage payments. To qualify, you need to be the primary borrower on the mortgage; you cannot use it to help your spouse or child.

Further, you should have no available options for making mortgage payments, such as taking another loan. If you have missed a few mortgage payments, but the lender has not yet started foreclosure proceedings against you, you may not qualify for an early super release. You may also not qualify if the mortgage lender is foreclosing upon your home after you’ve declared bankruptcy.

If you do qualify, the amount you can withdraw from your super fund in one financial year cannot exceed the total of three months’ mortgage repayments and one year’s interest due on the mortgage. For instance, if you need to make a mortgage repayment of $1,000 a month and the monthly interest is $600, the limit on super funds you can withdraw amounts to $10,200 covering $3,000 worth of repayments and $7,200 towards the interest due.

This sum will be paid out from your super fund as a lump sum, after deducting the necessary taxes. If you don’t have an adequate super fund balance, your request will likely be denied. Consider checking if you have multiple super fund accounts and can withdraw the same total from them.

How can I apply for early release of super for mortgage payments?

You can apply for a super withdrawal through the MyGov portal managed by the Australian Taxation Office (ATO). You’ll need to provide evidence along with your request, which includes:

• An official letter from your lender received within the past month confirming that your home will be foreclosed upon if you don’t make a repayment by a specific deadline. This letter should also mention your name (as the primary borrower) and address, the mortgage account number and outstanding balance, the repayments due over three months and the interest due over twelve months.
• A utility bill from the past three months to confirm that you’re living in the property. 

Before submitting your super release application, you should confirm with your super fund that they permit such a release. You may need to transfer super benefits to another fund which allows early release of super if your existing fund doesn’t. You can also ask the super fund manager to confirm the tax rate applicable to your super withdrawal, which you can only take as a lump sum.  

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