In the last week I have had a number of conversations with buyers, brokers and conveyancers about a challenge to finance approval that is coming through for possibly the first time ever – early access to Superannuation.
A challenge you say? Earlier in the year, there was commentary both conservative and otherwise, on the potential leg up that early access to Super could give a (young) buyer in this market, helping them to get past the deposit hurdle and starting on a property journey sooner. At first glance, having access to an extra $20,000 ($10K maximum withdrawal in each FY) was a massive boost, particularly in conjunction with the up to $45,000 in government grants already available.
Where the issue lies, is in the fact that early access to superannuation funds was a measure designed to help those experiencing genuine hardship, that otherwise had no safety net or access to funds and had had their income reduced either partially or wholly as a result of COVID. The key word you need to remember here is HARDSHIP.
Banks are in the business of lending money, yes, but generally they are looking to minimise risk in the way they do it. Lending to a buyer that has otherwise disclosed an impact on their earning capacity and a lack of savings is understandably, not going to be high on their to-do list.
What does this mean for you if you HAVE accessed Super early? Well, in the first instance, it might mean putting things on the backburner for a little bit. The feedback I have heard so far suggests that if you have pulled funds out, they need to be sitting in your account for 3 months before they can be considered “genuine savings” and the bank starts taking their risk glasses off. By all means talk to your bank or broker early to find out whether this applies to you or not, but better to know in advance and plan accordingly than be unpleasantly surprised at the post.
For those that haven’t accessed funds but were considering it for this purpose, CONSIDER CAREFULLY! Not only could it affect your position to purchase, but depending on the level of genuine need, you might find yourself in hot water with the ATO further down the track. As always, talk to your accountant or financial advisor for the right information for your personal circumstances.