Yes, if you are buying your first home and you add extra money to your super, there is a way you can access your super to buy a house or another type of home, called the First Home Super Saver (FHSS) Scheme.
Can I Use My Super To Buy My First Home? Again, you are unable to purchase a home within your super to live in and you can only use your superannuation to buy your first home if you have met a superannuation condition of release – by withdrawing your savings from super and purchasing your first home in your own name.
The main benefit is that super is an alternative avenue for property investing that has very little impact on personal finances or your future borrowing capacity. This means it's almost like an extra property in your portfolio that you may not have been able to buy without using your superannuation to finance it!
From 1 July 2022, you will be able to contribute, and access for your first home, up to $50,000 in total voluntary contributions made under the FHSSS. These contributions must be within existing contribution caps (e.g. the $27,500 per year concessional contributions cap).
This is the money you've been saving for your entire working life, so once you hit 65 (or 60 if you're retired), yes, you can use your super to pay off your mortgage.
You can withdraw, taking into account the yearly and total limits: 100% of your non-concessional (after-tax) amounts. 85% of eligible personal voluntary super contributions you have claimed a tax deduction for (concessional contributions) 85% of concessional (pre-tax) amounts.
“Investing in super is for the long term and assuming you invest in a balanced/growth portfolio, the return should exceed the long-term interest rate of a home loan. This coupled with taxation advantages makes super a great way to hold and build wealth,” Haddan says.
If eligible, a maximum of $30,000 can be released from your super to use as a deposit for your first home. From 1 July 2022 this amount is increasing to a maximum of $50,000 that can be released.
But you cannot use a regulated superannuation fund to do so, like an industry super fund or retail super fund. To buy a property using your super, you'll need to set up a Self Managed Super Fund (SMSF). An SMSF is a private super fund that you manage yourself, which is why you might hear it called DIY super fund.
This means if you're looking to buy a house with a value of $800,000, you'll need a deposit somewhere between $40,000 and $80,000.
In total, you will need 8-10% of the purchase price in savings to afford a home. So for example, if you were buying a place for $400,000 you would need around 10% or $40,000 in savings.
Many banks and non-bank lenders are willing to lend up to 95% of the property purchase price. Essentially, this means you'll need to save at least 5% of the purchase price to put towards your deposit. So, if you're buying a home valued at $400,000 then 5% of the purchase price is $20,000.
Can I Get the Pension if I Have Super? Having superannuation savings does not deny you from receiving Age Pension payments. Eligibility for the Age Pension is based on an Assets Test and an Income Test.
Should I have my super in Cash? The Cash option has a very low risk level when measured over the short term. However, if you intend to stay invested in this option for a longer timeframe, you should consider whether the current low returns will be enough for your situation.
Assuming that the average mortgage age in Australia starts somewhere between 25 and 34 years, then to work out the average age to pay off a mortgage in Australia, you just need to add a 25 to a 30-year term. This would make the average age to pay off a mortgage in Australia between 50 and 64 years.
Yes, for some people, $2 million should be more than enough to retire. For others, $2 million may not even scratch the surface. The answer depends on your personal situation and there are lot of challenges you'll face. As of 2023, it seems the number of obstacles to a successful retirement continues to grow.
The ASFA Retirement Standard Explainer says a comfortable retirement lifestyle would need $640,000 in super for a couple, or $545,000 for a single person.
You can only make one withdrawal in any 12-month period.
On a $500,000 home, a 20% deposit is $100,000 in savings.
A first home with a purchase price of up to $650,000 in NSW will not incur any stamp duty. So, in this instance, a deposit of 5% of the purchase price plus approximately $3,000 to cover the solicitor and loan administrative costs may be sufficient.
To put this in context, if you were buying a house for $600,000, lenders ideally would like you to have a deposit of $120,000 (20% of the property's value). If you have only saved $60,000 but you have sufficient income to support the loan, you may be able to take advantage of Lenders Mortgage Insurance.
Usually, 20% of the full value of the house is a good amount to aim for as a deposit. You can still get a loan if you have a smaller deposit, but you may need to take out Lenders Mortgage Insurance (LMI) which adds an additional cost to your loan. It'll also take longer to pay off.