With new updates for the First Home Super Saver Scheme coming into effect from July 1, it’s never been more important for first home buyers to stay in the loop.
Although using superannuation to purchase property has been in the headlines in line with the upcoming election, it’s worth remembering that there’s more than one way to legally use your super to get a foot on the property ladder.
While house prices have skyrocketed right around the nation, wages haven’t quite hit the same levels of growth. Even at the lowest quartile, the average sales price in Brisbane is still $850, 000 – which means you’d need to save $85, 000 for a 10% deposit, or a whopping $170, 000 for the ideal 20% deposit to avoid paying Lenders Mortgage Insurance.
As such, one can only imagine how long it would take to save up a six figure deposit while still paying rent, and other day to day expenses. If saving up to pay the mortgage deposit is one of the biggest hurdles that first home buyers face, what if there was an alternative? Enter, the First Home Super Saver Scheme.
How The First Home Super Saver Scheme Works
For those unfamiliar with the concept, the First Home Super Saver Scheme (FHSSS) was introduced as a means to help Australians boost their savings for a first home, by allowing them to build a deposit inside their superannuation account.
First introduced in the 2017-2018 Federal Budget as a means to reduce pressure on housing affordability, the FHSSS applies to voluntary superannuation contributions made from 1 July 2017. Although it’s been around for over five years, it’s not as straightforward as other federal initiatives, which has more or less spooked some first home buyers from using the FHSSS as a means to save, while also benefiting from a tax cut.
First home buyers can make voluntary concessional (before-tax) and non-concessional (after-tax) contributions into their super fund to save for a first home of up to $15, 000 per financial year.
However, there’s also been some updates to the First Home Super Saver Scheme as a reflection of the times. Now, the scheme has been expanded to allow eligible first home buyers to release up to $50, 000 of their superannuation to purchase a home, up from the previous cap of $30, 000.
It would seem that the Federal Government has also noted the technical difficulties first home buyers faced when navigating the FHSSS, and have made amendments to allow greater flexibility for those accessing the scheme. As such, a handful of these additional changes include –
- Increasing the discretion of the Commissioner of Taxation to amend and revoke FHSSS requests.
- Allowing individuals to withdraw or amend their requests prior to them receiving a FHSSS amount, and allowing those who withdraw their request to re-apply for FHSSS releases in the future.
- Allowing the Commissioner to return the released FHSSS money to super funds, provided that the money has not yet been released to the individual.
- Clarifying that the money returned to super funds is treated as funds’ non-assessable non-exempt income and does not count towards the individual’s contribution caps.
These amendments are announced to come into effect from 1 July 2022, while also permitting retrospective application from 1 July 2018.
For those exploring their options for their first property purchase and which initiatives could possibly help them do so, it’s important to get the right advice instead of making big decisions based on guesswork.
As of September 2021, mortgage brokers wrote 67% of all residential home loans in Australia – the highest number ever recorded. What’s more is that 90% of these customers reported that they were happy with the services provided to them. If you’re thinking about applying for your first mortgage, then it’s worth getting in touch with the professionals.
Partnering With Home Loan Professionals
Navigating the complex world of home loans has long been regarded as stressful, frustrating and time consuming – but if you can find the right advice on sourcing how mortgages work, then the good news is that it doesn’t have to be.
Since their inception in 2012, the team at Madd Loans have worked tirelessly in providing over 2,000 Queenslanders with finance options to help turn their dreams into reality. With the entire brand being built on referrals, owner George Samios takes great pride in making the loan process both fun, educational and stress free – and he has a swag of awards to prove it.
If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.