Superannuation / Superfunds for First Home Buyers

By First Home Australia In News No comments

For many first home buyers, looking to purchase their first home and saving for the deposit can be tough because the amount they can afford to save, falls in line with increases in the rising property market.

One solution is the possibility to use funds from your personal superannuation towards your deposit, although this option is only advisable to individuals who actually pay more towards their Superannuation than the minimum which is required.

This legislation is new and will give first home buyers an opportunity to enter the property market much sooner than they would be able to if they just made regular savings.

How it Would Work:

For a period of time, a certain level of your Superannuation funds are diverted to become your deposit on your new home. This would require higher contribution rates into your super annuation that will replace any lost retirement income.

Using your superannuation to purchase your new home brings with it some pros and cons:

Pros

As first-time purchasers, you can now find a way into the property market sooner than you could by other means. Housing affordability will be improved and has been proven by a similar scheme which has been put into place in Canada.

Cons

A potential problem with the new scheme for many, is the possibility they will be disadvantaged when they come to their retirement age. The Association of Superannuation Funds of Australia, state that many people will be unable to fund the lifestyle they seek once they have retired.

A secondary concern with this is that with the higher contribution rates a higher percentage of salary is locked up into a superannuation fund for an extended period of time.

There is, sometimes, an uncertainty in relationships and the financial states of younger couples. There is a higher risk of bankruptcy, divorce or separation which can have a major impact on any additional contributions which are being made into your fund.

First Home Australia has all the expertise you require to help you make your final decision, we also have many house and land packages that have small deposits and would not require this option to be considered.

We aim to offer and provide the best financial advice that can help you own your first home with no risk to yourself or your family.

 

Image Source: rethinkfinancial.com.au