How Can I Use My Super to Buy a House?

Can you use super to buy a house?

Yes, it is possible to use your superannuation to buy a house, however, it needs careful navigation. If you’re a first-time homebuyer who has made additional contributions to your super, you may be eligible to access your super for a home purchase through the First Home Super Saver (FHSS) Scheme. Whether you’re aiming to secure your first home or investing in property for the future, LINK Advance’s Brisbane mortgage brokers can assist you in exploring options to utilise your super. Whether it’s through the FHSS scheme or leveraging your self-managed super fund (SMSF), we’re here to help you achieve your homeownership goals.

To talk more about the benefits of these schemes, we have invited our resident mortgage broker extraordinaire Hugh to give you some expert insights. Hugh has worked in the broking industry since 2016, submitting roughly 600 loan applications in that time. He specialises in helping first home buyers navigate not only the finance landscape, but the offer process when it comes to securing their first home. With a high-touch model, Hugh prides himself on the quality of experience that he creates for his clients. 

First Home Super Saver (FHSS) Scheme

How does the FHSS scheme work?

The FHSS scheme allows first-time home buyers to save for a deposit within their super fund. Contributions made under this scheme are subject to specific rules and can be withdrawn to purchase a home. First-time home savers have the option to make additional contributions to their super (up to $15,000 per financial year). These funds can then be withdrawn as a deposit for your first home. The total amount you can contribute and withdraw under the FHSS scheme is capped at $50,000 over all years, which can be used towards your first home deposit.

Are you eligible?

Eligibility for the FHSS scheme includes being at least 18 years old, having never owned property in Australia before, and intending to live in the property you purchase as your primary residence.

Hugh says:

“If you are seriously planning on purchasing your first home in the next couple of years, the FHSS can be a cost effective way of saving for your deposit, or providing a boost to your deposit. Due to the taxation benefits of the scheme it is another boost for first home buyers that is worth taking advantage of when you can.”

Using a self-managed super fund (SMSF) to buy an investment property

The rules of buying a property through SMSF

Utilising an SMSF to purchase an investment property involves strict regulations. The property must meet the “sole purpose test” of providing retirement benefits to members, and it cannot be lived in or rented by members or related parties. If your self-managed super fund buys a commercial property, it can be rented out to a member for their business. However, the lease must adhere to market rates and comply with specific regulations.

Benefits if you access your super to buy a house

Accessing super for a home purchase can accelerate your path to homeownership, potentially allowing you to enter the property market sooner and secure your dream home. It can also provide tax advantages, such as concessional tax rates on contributions and investment earnings within the super fund.

Hugh says:

“One of the major benefits to this scheme is that the additional super isn’t as visible or accessible as it would be if it were in a savings account. This is potentially good news for those would-be homebuyers that see money amassing in an account, and then feel compelled to book an overseas holiday!”

Potential downsides of using super to buy a house

While accessing super for a house purchase can offer advantages, it’s essential to consider the potential drawbacks. This includes reducing your retirement savings, paying additional taxes or fees, and the risk of market fluctuations affecting your investment.

Is it right for me?

Here are the final thoughts from our expert, Hugh:

“Using super to buy your first home is a great way to speed up the often laborious process of saving for a deposit. We’ve seen plenty of buyers enter the market far earlier than they would have done otherwise, and it’s one of a few great schemes that has popped up in the last few years that has made a genuine difference to many homebuyers.”

Determining whether using super to buy a house aligns with your financial goals requires careful consideration. Consult with a finance broker at LINK Advance, to receive personalised guidance tailored to your specific circumstances. We can help you weigh the pros and cons, assess eligibility for schemes like FHSS, and explore alternative strategies to achieve your homeownership aspirations.