First Home Super Saver Scheme
Thought about Paying Off Your Home Loan With Your Super? Have you heard about The First Home Super Saver Scheme?
Paying off your home loan can be a daunting task, but did you know that in Australia, you may be able to use your superannuation to help you pay off your mortgage? It's called the 'First Home Super Saver Scheme,' and it allows you to use your superannuation to help pay off your home loan. Here's what you need to know.
What is the First Home Super Saver Scheme?
The First Home Super Saver Scheme (FHSS) was introduced by the Australian government to help first-home buyers save for a deposit. The scheme allows you to make voluntary contributions to your superannuation and then withdraw those contributions plus any associated earnings to put towards a home deposit. The FHSS also allows you to withdraw up to $15,000 of your voluntary contributions each financial year, to a maximum of $30,000 in total.
How does the FHSS help pay off your home loan?
Once you've withdrawn your voluntary contributions, you can use them to put towards your home loan deposit. The larger your deposit, the less you'll need to borrow, which means you'll pay less interest over the life of your loan. You can also use the money to pay off a lump sum of your loan, which can reduce the amount of interest you pay over the life of your loan.
Things to consider:
While using your superannuation to pay off your home loan can be tempting, there are some things to consider before you take the plunge:
- The FHSS is not a guarantee that you'll be able to pay off your home loan completely, but it can help you save for a deposit.
- You'll need to meet eligibility criteria to use the FHSS, including being a first-home buyer and making voluntary contributions to your superannuation.
- If you withdraw your voluntary contributions from your superannuation, it will reduce the balance of your superannuation account, which could impact your retirement savings.
- Withdrawals from the FHSS are taxed at your marginal tax rate, minus a 30% tax offset.
- Before using your superannuation to pay off your home loan, it's essential to speak to a financial advisor to ensure it's the best option for your financial situation.
The First Home Super Saver Scheme can be a useful tool for first-home buyers looking to save for a deposit or pay off their home loan. However, it's crucial to understand the eligibility criteria, the impact on your retirement savings, and the potential tax implications before making any decisions. Remember, it's always a good idea to seek professional advice to ensure you're making the right financial decisions for your future.
Speak to a mortgage broker today about refinancing to set yourself up to pay off your home faster and avoid paying unnecessary interest.