That certainly is a mouthful, but the short answer is YES!. To provide some clarity we asked finance and mortgage broker, Rod Lingard to explain more about the scheme works and how first home buyers can use it to save a deposit for their new home faster.
The First Home Super Saver (FHSS) scheme was introduced by the Australian Government in the Federal Budget 2017–18 to reduce pressure on housing affordability.
The FHSS scheme allows you to save money for your first home inside your superannuation fund. The scheme helps first home buyers save faster with the concessional tax treatment within super.
So what is it and how does it work?
Well first let’s talk about the benefit so you keep reading – FREE MONEY. That’s right, The First Home Super Saving Scheme (FHSSS) puts free money in the hands of first home buyers.
Now I have convinced you to read on I need to clarify there is no such thing as free money. What seems too good to be true nearly always is. But the tax advantages the government are providing means under this scheme you will save your deposit, with the same regular contribution, more quickly.
So how much free money is available?
In the finance world the answer to the question is nearly always “It Depends”.
So let’s have a look at how First Home Buyers could get $4,949 free money.
A couple decide they want to save about $20,000 for their deposit, and their time frame is about 2 years. They are going to save the traditional way by saving their after tax income in a bank account. They decide to save $400 per fortnight for 2 years and at the end they have $20,800 saved.
But if they are genuine about saving for a deposit, and have the same savings goal, they could choose to use the FHSSS, and make voluntary contributions of $400 per fortnight. At the end of the 2 years they will be able to withdraw $25,749.
Let’s put that in real terms. The couple who chose the traditional method can withdraw $20,800, the couple who use the FHSSS can withdraw $25,749.
What a great way to Supercharge your deposit and purchase your first home sooner.
The scheme does NOT prevent you from receiving the First Home Buyers Grant, or any other stamp duty concessions that may be available.
If you would like to learn more about this new government initiative and how to get it working for you, please call us on 1300 888 299.
Warning: This blog is not designed to replace professional advice. It has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the advice, in light of your own objectives, financial situation or needs before making any decision as to whether this scheme is appropriate for you.