Australians can now use their superannuation to help buy their first home

THE First Home Super Saver Scheme was devised to help entry-level buyers get on the property ladder, but will it work?

TAPPING into stashed superannuation savings for a house deposit is now possible, but anyone who thinks they can rip out their super savings and simply buy themselves a home are mistaken; the new scheme comes with plenty of restrictions.

Headaches caused by the housing affordability crisis, particularly in the booming Sydney and Melbourne markets, prompted the Turnbull Government to announce the First Home Super Saver Scheme in this year’s Federal Budget.

First home savers can now stash their savings away towards a house deposit in their superannuation accounts.

And it’s finally been given the green light, so aspiring borrowers can stash extra savings alongside their retirement nest eggs and put them towards a home deposit.

Under the new scheme, individuals can make voluntary contributions of up to $15,000 per year and $30,000 in total to buy their first home. These are taxed a 15 per cent, instead of 30 per cent.

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But be warned, users of the scheme cannot withdraw their existing super balances, they can only withdraw extra contributions made on top of their 9.5 per cent compulsory contributions.

The Association of Superannuation Funds of Australia’s chief executive officer, Dr Martin Fahy, said funds are ready for the scheme, but individuals must make their own assessments.

ASFA CEO Dr Martin Fahy said individuals should work out whether the scheme is right for them to help save for a house deposit.

“It will be up to first home buyers to decide whether the scheme is right for them in terms of the timing of when funds will be able to be accessed and whether the tax arrangements are attractive in their specific financial situation,’’ he said.

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Mortgage Choice chief executive officer John Flavell said he supported schemes to help first-home buyers but was unsure FHSSS was the answer.

Mortgage Choice CEO John Flavell said he is doubtful many people will take up the new First Home Super Saver Scheme.

“The first homebuyer super saver scheme is unlikely to have a huge impact,’’ he said.

“Average wage earners able to take advantage of the $30,000 limit over a two-year period, will only end up a few thousand dollars better off than if they were to store the money in a savings account.

“This benefit is unlikely to help too many first home buyers realise their property ownership goals quickly and easily.”

Certified financial planner Patrick Canion said it was a good way to save because of the tax benefit and “removes the temptation to squander the money.”