First home saver account
First home saver accounts offer an effective way of saving for your first home because your savings are increased by government contributions. These contributions are a percentage of your own contributions, up to a limit each year.
It’s a special purpose account because you must use the money you save for the deposit or other costs you incur when you buy or build your first home. It’s more like a term deposit than a normal everyday account because you have to keep the money in the account for a minimum period of time.
If you lose your eligibility to hold an account or you do not buy a house and close the account the money must be contributed to your superannuation unless other conditions are met.
You can’t make partial withdrawals. The only time you can withdraw from the account is to close it and you can generally only do that after the minimum qualifying period has passed.
There are several good reasons to open a first home saver account. The more money you save, the more the government will contribute – up to a limit each year.
You need to understand the separate rules for eligibility to:
o open an account
o make contributions
o receive the government contribution
o access your funds.
Not all first home saver accounts are the same. Choose the account provider you want to have your account with and read their product disclosure statement to find out more. Banks, building societies, credit unions, life-insurance companies, friendly societies and trustees of public-offer super funds can all offer first home saver accounts.
Once you’ve opened an account, you can deposit into it as often or infrequently as you like. Other people (such as your parents or other family members) can also deposit into your account. (Deposits are also referred to as ‘personal contributions’ to distinguish them from government contributions.)
The government will make a contribution equal to 17% of your personal contributions for the financial year, up to a maximum amount each year.
When you withdraw from the account you have to take all the money at once and close the account; you cannot make partial withdrawals.
There are rules about when you are entitled to withdraw the funds. The funds you don’t use for a home must be paid into your superannuation (unless you’ve reached 60 years of age). You cannot ever open another first home saver account after you purchase a home or have the balance paid to superannuation.
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