skip to log on skip to main content
VoiceOver users please use the tab key when navigating expanded menus

Understanding the First Home Super Saver Scheme


Published 13 February 2018

The First Home Super Saver Scheme exists to help first-home buyers. Amanda Vanelderen asks, should they use it?

In brief

  • The super saver scheme can be an effective strategy for first-home buyers to save a deposit.
  • The lower tax environment of super can help boost savings.
  • There’s some disagreement over the scheme’s potential impact. 

Want to buy a house and know you could afford the mortgage repayments, but can’t seem to get the deposit together? The First Home Super Saver Scheme may give you a helping hand.

Announced in the 2017-18 federal budget, it was legislated in December 2017. Through the scheme, an individual can save up to $30,000 in total (a maximum to $15,000 each year) by making voluntary concessional (before-tax) and non-concessional (after-tax) contributions into their superannuation to use as a deposit (super tends to be a more favourable tax environment to save money in). 

The government estimates that it will accelerate first-home buyers’ savings by at least 30 per cent.

Why do first-home buyers need help?

“It’s definitely possible for first-home buyers to get into the market, but according to a number of metrics it’s very difficult compared to what’s been the case historically,” says ANZ Senior Economist, Daniel Gradwell.

“If we look at how long it would take a person on the average wage to save a 20 per cent deposit, that’s at record-high levels. At the national level, it’s taking about eight years and in New South Wales, it’s about 10 years.”

To put that in context, the average total household income is about $120,000 nationally and $137,000 in Sydney. Assuming a saving of 15 per cent, a Sydney-based individual or couple would need to be saving about $1,700 a month for 10 years to achieve a 20 per cent down payment on a $1.042 million home (the median price for a home in Sydney, based on Residex’s March 2016 quarter price).

Why was the scheme introduced?

The government introduced a range of measures to put the great Australian dream of home ownership back in reach in last year’s budget.

If a generation is locked out of the housing market altogether, or getting into the market later because it’s taken so long to save a deposit, more people will be retiring with debt and possibly living in aged poverty.

Can I use my super to buy a house now?

Withdrawals can be made from 1 July 2018. But, there are a few conditions:

  • You can only use voluntary contributions you’ve made since 1 July 2017, not the compulsory super paid by your employer.
  • It’s for a first-home deposit only, so if you want your first property purchase to be an investment property, you’ll have to live in it for at least six months within the first 12 months after you buy, before switching it over to be an investment property.       

Basically, using your super in this way is a type of savings account with tax concessions. While individuals can contribute up to $30,000 in total, couples can pool their savings for a single deposit, giving them up to $60,000. When you withdraw it for your first-home deposit (and the interest it’s made), this is taxed at a concessional rate.

How much difference can it make?

The scheme will be managed by the Australian Taxation Office, and it will decide how much you’re eligible to withdraw.

Use the government’s First Home Super Saver Scheme estimator to see for yourself how it compares to saving in a standard savings account. You can enter your income and how much you’ll sacrifice before tax into your super in a year. The estimator tells you by how much your net pay will be affected and how much you’ll be able to save for a deposit.

For example, if someone’s taxable income is $100,000, the estimator shows that making the maximum contribution of $15,000 will decrease their take home pay by $9,420 a year. After two years, they’ll have an estimated $24,417 available to withdraw for their deposit, $5,711 more than from a standard savings account.

 

Sydney’s rising property prices has made it hard for first-home buyers to get a foothold.

What if I change my mind?

Voluntary contributions can be withdrawn to build or buy a home, nothing else. So, if your plans change, and you decide not to buy a house, you won’t be able to withdraw the money for another purpose. But money invested in super isn’t wasted as it will boost your overall super balance.

Will it mean I have less money in retirement?

Not necessarily. 

If you weren’t likely to make extra contributions anyway, it won’t impact your super balance. But using the scheme to get your deposit together may mean you gain an asset (your home) a little more easily than you otherwise would. This will be of huge benefit as you reach retirement.

Is the First Home Super Saver Scheme a good idea?

There’s disagreement on the impact the scheme could have. While the Committee for Economic Development of Australia sees it as key to improving housing affordability and prevent poverty in older Australians, the Association of Superannuation Funds of Australia (ASFA) isn’t so sure. The association is concerned it will drive up house prices and lead to lower retirement incomes.

So the jury is currently out on whether the scheme is a good idea.

So, should I use the scheme to help save my deposit? 

It can work for you if:

  • the ‘hands-off’ nature of super will help you save
  • you’re saving for a deposit anyway and want to make the most of the tax concession
  • the additional savings means you can save a larger deposit and avoid lenders’ mortgage insurance, which can add up to tens of thousands of dollars to the cost of buying a home.

It might not be the best idea if:

  • you already have a deposit saved
  • you can fund your deposit in another way (such as your parents acting as guarantors).

Work out how much it could mean for you

An extra $5,000 to $10,000 over a year or two could mean all the difference to getting on the property ladder.

If you decide to do it, try to keep up the good habit of extra super contributions after you buy your home. It’s a great way to boost that balance, and you can get advice on how to make the most of it at tax time.

In the future, you might be glad you made the effort.

How to make a voluntary contribution with ANZ Smart Choice Super

ANZ Smart Choice Super customers can make a contribution via BPAY.

Biller Code – 169060

Reference Code – member number (this is a combination of your ANZ Smart Choice Super BSB and account number)

 

The information contained in this document is general in nature only and does not constitute tax advice. We recommend that you seek independent tax advice specific to your individual circumstances from a tax specialist or registered tax agent.

Talk to us about superannuation

13 12 87

Mon-Fri 8am to 7pm (AEST) 

Getting more from your super

Article

Calculate how much super you need for retirement

Do you know how much super you’ll need for retirement? Plan for the future with the help of online retirement calculator tools.

  

Article

Tips for managing your super throughout your life

Actively managing your super throughout your life is key to a comfortable retirement. Here are some of the most common considerations.

  

Article

Five ways to shape up your superannuation

From changing investment options to government perks, learn five easy strategies that could help you make the most out of your superannuation.

  

View all

OnePath Custodians Pty Limited (ABN 12 008 508 496, AFSL 238346, RSE L0000673) is the trustee of the OnePath MasterFund (ABN 53 789 980 697, RSE R1001525, SFN 292 916 944) (Fund) and issuer of the interests in “ANZ Smart Choice Super”, a suite of products consisting of ANZ Smart Choice Super, ANZ Smart Choice Super for employers and their employees and ANZ Smart Choice Super for QBE Management Services Pty Ltd and their employees. The issuer is a wholly owned subsidiary of Australia and New Zealand Banking Group Limited (ABN 11 005 357 522) (ANZ). ANZ is an authorised deposit taking institution (Bank) under the Banking Act 1959 (Cth). Although the issuer is owned by ANZ it is not a Bank. Except as described in the relevant Product Disclosure Statement (PDS), an investment with the issuer is not a deposit or other liability of ANZ or its related group companies and none of them stands behind or guarantees the issuer or the capital or performance of any investment. Such investment is subject to investment risk, including possible repayment delays and loss of income and principal invested. Returns can go up and down. Past performance is not indicative of future performance.

This information is subject to change. You should read the relevant Financial Services Guide (FSG), PDS, product and other updates (for open and closed products) available at onepath.com.au and consider whether the product is right for you before making a decision to acquire, or to continue to hold the product. Updated information will be available free of charge by calling Customer Services on 133 665.

Taxation law is complex and this information has been prepared as a guide only and does not represent tax advice. Please see your tax adviser for independent taxation advice.

The information on insurance cover is a summary only of the terms and conditions applying to the insurance cover. To the extent there is any inconsistency with the terms of the insurance cover provided by the insurer, the terms of the insurance policy will prevail.

The information provided is of a general nature and does not take into account your personal needs, financial circumstances or objectives. Before acting on this information, you should consider the appropriateness of the information, having regard to your needs, financial circumstances or objectives. The case studies used in this article are hypothetical and are not meant to illustrate the circumstances of any particular individual. Opinions expressed in this document are those of the authors only.

ANZ does not represent or guarantee that access to the ANZ Internet Banking or the ANZ App will be uninterrupted. Temporary service disruptions may occur. ANZ recommends that you read the ANZ App Terms and Conditions available at anz.com and consider if this service is appropriate to you prior to making a decision to acquire or use the ANZ App.

In addition to their salary, ANZ staff members may receive monetary or non-monetary benefits depending on the product they are selling or providing advice on.

Apple, the Apple logo, iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc.

You need Adobe Reader to view PDF files. You can download Adobe Reader free of charge.