Rising Tide Blog

As part of the 2017-18 budget, the federal government announced a new housing affordability plan aimed at keeping the dream of home ownership in reach for younger Australians.

The plan includes an important new incentive targeted towards helping first-home buyers to save for a deposit – and with the growing cost of living, this is something that we at Rising Tide Financial Services know is a pain point for many young people who want to own their own home.

Starting from 1 July, the government’s new First Home Super Saver Scheme (FHSSS) will allow eligible buyers to withdraw voluntary contributions made to their superannuation fund (as well as the interest earned!) to be used as a deposit for their first home.

Essentially, this means that rather than simply saving for a deposit in a high-interest bank account, you can instead save it in your superannuation fund where you’re likely to earn a much higher interest rate, and ultimately reach your goal faster.

We think it’s a fantastic option for those looking to grow their home deposit faster, but there are a few important things you should be aware of before you dive in.

First of all, the maximum contributions and amount (including interest) that can be withdrawn is $15,000 per year, per person. What this means is that if you contribute more than $15,000 in a year, you won’t be able to withdraw this to use for your deposit.

The maximum amount that can be released under the FHSSS is $30,000. However, if you’re a couple you could double this and potentially have a deposit of up to $60,000 in just two years!

Furthermore, it’s important to understand that only voluntary contributions that can be withdrawn and that the mandatory 9.5% superannuation guarantee which is paid by your employer is not included in the scheme and cannot be used in the FHSSS.

In order to be eligible to use the FHSSS, you’ll need to meet the following requirements:

• You must be 18 years old or over
• You must be assessed individually rather than in a couple
• You must not have previously owned a property
• You must not have previously released funds via the FHSSS
• You must live or intend to live in the premises you are buying
• You must live or intend to live in the premises for at least 6 months of the first 12 months you own it
• You must not use your FHSSS withdrawal or buy a ‘new’ residential property, including vacant land

Remember, while it’s a great opportunity, it’s important to consider all of your options before you commit to a locked in plan like this. Should you change your mind, you won’t be able to withdraw the funds to be used anywhere other than a home deposit.

At Rising Tide, our expert team of financial advisers can help you find the right savings plan for your individual circumstances. To find out more, contact us today on 03 370 330 287.