19 Feb 2020

How to use super for your home loan deposit

Getting into the property market can be tough. We have some good news; you don’t have to wait as long or save as much as you think you do. Here’s how to use your super for your home deposit.

Enter the first home super saver scheme (FHSS)

The Australian Government introduced the FHSS to reduce the financial pressure on new homebuyers. 

“The FHSS scheme allows you to save money for your first home inside your super fund. This will help first home buyers save faster with the concessional tax treatment of superannuation.” – Australia Taxation Office

You can now make voluntary contributions (both concessional and non-concessional) to your super to save for your first home. Your contributions are capped and $15,000 per year, with a total cap of $30,000 across all years. 

According to the ATO:

You can use this scheme if you are a first home buyer and both of the following apply:

  • You either live in the premises you are buying, or intend to as soon as practicable.
  • You intend to live in the property for at least six months within the first 12 months you own it – after it is practical to move in.

You must be a first home buyer to take advantage of this incentive. 

The super saver account works by letting individuals contribute additional amounts of money to their super account through individual deposits or salary sacrifice, then withdraw that amount as a capital gain. The super saver account lets your money grow faster by investing pre-tax amounts. The ATO does deduct the tax upon withdrawal, but even still, you end up with more capital gains that you would have if you invested your money in a traditional savings account.

Basically, you’re using your super as leverage with your lender so you can get a deposit sooner. 

Currently, lenders will only let you borrow up to 70% of the home’s value. It’s wise to be aware that there are additional and hidden costs involved in purchasing a home so you can prepare for them in advance. 

Superannuation: How Mortgage House can help

Mortgage House works with Perpetual Private Clients to offer you a range of quality superannuation funds and services including:

  •  Personal and employer super funds customised for your situation and life stage
  •  DIY, self-managed super funds and small APRA funds
  •  Making the most of superannuation tax concessions
  •  Superannuation planning to help maximise your retirement savings
  •  Accessing part of your super in the lead up to retirement (transition to retirement strategies)

Our range of superannuation solutions makes it easy for you to manage your super and save for retirement.

If you need advice on how to make the most of your super or are looking to establish a self-managed super fund, we can help. Contact us or Apply Online by clicking the button below.

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