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How to use superannuation as a first home buyer?

How to use superannuation as a first home buyer?

If you’re planning to buy your first home, you might be eligible to use your superannuation savings for a house deposit. The First Home Super Savings Scheme (FHSSS) allows you to use a substantial portion of your super savings to buy your first home. 

There’s no doubt that your superannuation savings play an important role in your retirement strategy, but it may be worth thinking about using part of your voluntary contributions to make up your home deposit as a first home buyer, dependent on your circumstances. 

What is the First Home Super Saver Scheme? 

The federal government announced a new scheme in 2017 that allowed first home buyers to access their superannuation to get a home loan deposit. The scheme applies to all voluntary super contributions made since July 2017.

According to this scheme, you can use your superannuation as a first home buyer in Australia to release up to $15,000 of your voluntary super contributions per year, and up to $30,000 in total, for your home deposit. This scheme has become widely popular due to the benefit of earning a higher rate of return on money while paying a lower tax on funds.

Who is eligible for the First Home Super Saver Scheme? 

The main eligibility criteria to qualify for the FHSSS is that the individual should not have purchased any property previously, including investment properties and vacant land. That being said, eligibility is assessed on an individual basis, so couples, siblings, relatives, and friends can each apply for FHSSS contributions to purchase the same property.

You can make super contributions at any age, however, you must be 18 years and older to request a release of funds using the FHSS scheme. The home you purchase or construct must be located in Australia, too. 

It’s important to note that superannuation guarantee contributions made by the employer or spouse contributions cannot be accessed using the FHSSS. You can only apply to use your superannuation as a first home buyer once, and if the request is cancelled, you can’t apply again. 

When should you apply for the release of FHSSS contributions? 

If you're considering this path, you could request the release of your FHSSS contributions when you start the home buying process, like applying for a home loan.

If you’ve already signed a contract for your home, it’s mandatory to make a valid release request within 14 days of entering the contract. Due to the tight timeline, you could also consider signing the contract after making a valid release request.

After making a valid release request, you will need to sign a contract within 12 months and inform your super fund accordingly. If you don’t sign a contract within 12 months, the money will be returned to your super fund. 

After requesting a release of funds, it could take anywhere between 15 to 25 business days to receive your money, so plan accordingly. 

Can superannuation be used for a second home or property?

It’s very rare to receive money from your super fund for purchasing a second house or property. However, if you’re facing financial hardship that has resulted in the loss of all your previously-owned property, you may be eligible to apply for the FHSS scheme. You may be able to access your super savings for a home deposit on your second property under the following circumstances: 

  • Bankruptcy
  • Divorce or separation from a partner
  • Loss of employment
  • Illness
  • Victim of a natural disaster 

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This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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