First home buyers now have a new way of increasing their deposit, with the opening of the first First Home Saver Accounts on October 1.
The initiative, which is part of the Federal Government’s plan to increase housing affordability, takes individual savings and combines them with government co-contributions in a high-interest-earning account. The resulting savings attract minimal tax, and there are no charges for withdrawing your savings at the end of the minimum four-year saving period providing you use it for the building or purchase of your first home.
A range of financial institutions have agreed to offer the accounts, including the Commonwealth and ANZ banks, as well as AMP. Each institution has set its own interest rates on the accounts. X Inc Mortgage Broker, Sandra Crossland, said the accounts were a good additional tool for first home buyers trying to put together a decent deposit. “It’s a step in the right direction, certainly,” said Sandra. “And if used correctly, in conjunction with the right home loan, they could be very effective in helping first home buyers to make that final push into home ownership.” However, Sandra warns that the First Home Saver Accounts are a longer-term savings plan which may not be suitable for buyers looking to purchase in the near future. “There’s a minimum four-year term required, during which time you also must meet a specific savings target of at least $1,000 per year,” said Sandra. “So you may need to look at other options if you wanted to purchase sooner.”
Along with the minimum term and savings targets, there are a number of other conditions that need to be met to be eligible for the scheme.
be aged 18 or over and under 65;
be an Australian resident for taxation purposes;
not previously purchased or built a first home in Australia to live in;
not have or have not previously had an account; and
make an initial contribution of at least $1,000.
To find out more about the First Home Saver Accounts, including co-contribution percentages and taxation, or to find the home loan that is in your best interest, contact Sandra Crossland on 02 9875 9403.