It is every young family’s dream to buy a house to make into a home but with rising property prices, it is becoming more difficult for first home buyers to enter the market. A young family might not have much in the way of savings and it can seem impossible to come up with the minimum amount needed for a deposit on a mortgage. The Australian government, under Treasurer Joe Hockey’s suggestion, is considering letting people access their superannuation account for the purpose of putting that money towards buying a house.
Superannuation for a new home
The retirement funds are generally not allowed to be accessed until a person is the age of 60 but the federal government is taking a lead from other countries such as Switzerland, Canada and Singapore and thinking of letting people dip into their retirement funds early to invest into a home. The idea has gotten a lot of backlash from the opposition government and it probably should. Although the money is for that person to spend however they want, it also serves as a safety net to make sure that people can afford their needs when they get older. Instead of having the capital being held by the government at a secure interest rate and knowing it will be there in the future, it might soon be possible to take a risk and use some of that money in the real estate market.
The proposal hopes to have several positive and negative effects. Getting young families into homes is a major goal of the current administration. But the goal also includes letting people become more self-reliant and less dependent on the superannuation scheme. The 5% taken out of Australians’ pay cheques is usually something that all Australians are looking forward to one day. However there is a possibility that many will not have as much as they might have had when it comes time to enjoy their golden years if this proposal gets approved.
The access to retirement funds might just fuel home prices higher and have a muted effect on making homes more affordable. Any large decision like buying a home is already big enough and maybe it is not the best decision to risk your superannuation funds on the volatile property market. There are many ways to get the loans needed for a mortgage and with the current low interest rates it could be wiser to leave your superannuation alone and buy a house the old fashioned way.
The old fashioned way being; acquiring a home loan or a debt consolidation loan from a trusted bank or a trusted lender, usually at a more competitive rate. Speak to a financial consultant about the right type of loan for you and your family to buy a new home.