Can I Use My Super to Buy a House? Your Questions Answered

Whether you’re looking to buy your first home or invest in a property for the future, there are options for you if you want to use your super to buy a house. Through the First Home Super Saver (FHSS) scheme or the use of your self-managed super fund (SMSF), an Inovayt mortgage broker can help you get into your new property faster.  Ready to get started? Read on for more information on how you can use super to buy a house.

How can I use super to buy a house?

Our clients often ask us if they can use super to buy a house. While technically, the answer is yes, it is a lot more complex and involved than a regular home loan.  There are two ways you can use your super to buy a house - the First Home Super Saver scheme and by using a self-managed super fund. While each has its benefits and drawbacks, there are also specific user groups who can access these opportunities - those buying a home for the first time and those with a self-managed super fund. Do you fit into one of these categories? Read on to see how this could advantage you! 

The First Home Super Saver scheme

The First Home Super Saver (FHSS) scheme is a government initiative allowing potential first homeowners to save for a home deposit within their superannuation fund. Saving money in your super fund can be more beneficial than putting money aside in a high-interest savings account because of the concessional tax treatment of superannuation. 

How does it work?

The FHSS scheme lets first-time homeowners make voluntary concessional (before-tax) and non-concessional (after-tax) contributions into their super fund to save for their first home. These contributions can be up to $15,000 per financial year.  Rather than being taxed at the usual marginal rate, the first $25,000 that goes into your account each year is taxed at just 15 per cent. Any compulsory contributions your employer makes, as well as voluntary contributions, are counted towards this threshold.

Eligibility

When it comes to the FHSS scheme, there are a few eligibility criteria you must meet. This criteria includes: 

• You must be 18 years of age or older when requesting an FHSS scheme determination or a release of money under the FHSS scheme. (You can, however make contributions under the age of 18). 
• You're a first home buyer, having never owned property in Australia – this includes an investment property, vacant land, commercial property, a lease of land in Australia, or a company title interest in land in Australia.
• You intend to occupy the property you buy as soon as practicable and for at least six months within the first 12 months.
• You have yet to make a FHSS release request.

One of the major benefits of the FHSS scheme is that it is assessed individually, meaning couples, siblings or friends can access their own eligible FHSS contributions to purchase the same property. 

Can a mortgage broker help me with the First Home Super Saver (FHSS) scheme?

Yes! A mortgage broker can be an invaluable partner when it comes to navigating the complexities of the First Home Super Saver (FHSS) Scheme, helping you make the most of this government initiative designed to assist first-time homebuyers in Australia.

1. Expert Guidance: Mortgage brokers are well-versed in the intricacies of home loans and government schemes like the FHSS. They can provide you with expert guidance and answer your questions, ensuring you understand the scheme's requirements and how it can benefit you.
2. Financial Assessment: A broker can assess your financial situation to determine if you are eligible for the FHSS Scheme. They can help you understand the maximum amount you can contribute and withdraw, based on your circumstances, helping you make the most of the scheme.
3. Loan Selection: Mortgage brokers have access to a wide range of home loan products from various lenders. They can help you choose a loan that aligns with your FHSS goals, ensuring you have a loan structure that works best for your situation.
4. Application Assistance: Brokers can assist you with the FHSS Scheme application process, helping you complete the necessary paperwork accurately and efficiently. This reduces the risk of errors and delays in accessing your savings.
5. Loan Pre-Approval: Mortgage brokers can also help you secure pre-approval for your home loan, a crucial step in the homebuying process. This ensures you know how much you can afford to spend on your first home, in line with your FHSS contributions.
6. Ongoing Support: Your mortgage broker can be a long-term resource, guiding you through the entire homebuying journey, from FHSS application to settlement. They can also help you explore other potential incentives and grants available to first-time buyers.

They provide personalized advice, streamline the application process, and help you make informed decisions about your home loan, ensuring you get the most out of this valuable government initiative. With their expertise and support, you can take confident steps towards achieving your dream of homeownership. To learn more about the FHSS scheme, get in touch with one of our expert mortgage brokers today.   

Using your self-managed super fund 

The second option you can use to purchase a house through your super is by using a self-managed super fund (SMSF). This option is a lot more complex, and there are some significant ins and outs to consider.  Australians can use their self-managed superannuation fund to buy an investment property, but they can’t live in it. This property can be purchased through an SMSF - a fund with up to four members.  However, setting up an SMSF is a highly regulated process, and it’s wise to get advice from a finance professional to fully understand the responsibilities and help you set up the fund correctly.  When it comes to purchasing property through an SMSF, borrowing restrictions are quite strict. For example, if you have $300k in an SMSF, it’s not possible to use the full amount to buy an investment property. Self-managed super funds are also required to keep a ‘liquidity buffer’ - made up of things like cash and shares - that is worth 10 per cent of the proposed investment’s value in the self-managed fund.  Interested in purchasing an investment property with your self-managed super fund? Get in touch with our expert team today. 

How much of my super can I use to buy a house?

As we’ve discussed, the intricacies surrounding purchasing property with your superannuation and how much money you can use are quite complex.  Each individual can take out a maximum of $50k using the First Home Super Saver scheme. If you’re buying a property with another first home buyer, you can combine these amounts and take out a maximum of $100k to put towards a deposit for your first home.   Things can get a little more complicated if you’re using a self-managed super fund to purchase an investment property. The best practice for buying a property using an SMSF is to have a balance of at least $200k (however, this will vary based on your fund). To purchase a property, you’ll also need a buffer. For example, if your super balance is $300k, you can use $200k as a deposit to borrow $400k to purchase a $600k property.  While these will give you some rough estimates of what you can borrow, everyone’s financial situation differs. Talking it through with one of our expert Inovayt financial advisors means you’ll get advice customised to your specific situation. 

How can the Inovayt team help me use my super to buy a house? 

Whether you’re a first-time home buyer or looking for your next investment, the expert team at Inovayt work with you to help you use your super to buy a house. From self-managed super funds to the First Home Super Saver scheme, contact us and get into your new property sooner.