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First Home Saver Accounts - new rules now active
Wednesday, 25 May 2011
Changes to First Home Saver Account scheme allowing early purchase became law on 25th May 2011.
First Home Saver Account rule changes are now active, allowing early purchasers to use the savings in their account towards their mortgage (after meeting the 4 years) rather than losing their first home savings to super.
This effectively means a FHSA holder can pay a deposit on their first home before meeting the four year rule, and have until settlement date to make further account contributions to maximise their account benefits. Once settlement takes place, no further contributions can be made but the four year rule must be met before their savings can be released and go towards their mortgage.
See more details after the jump.
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First Home Saver Account rule changes are now active, allowing early purchasers to use the savings in their account towards their mortgage (after meeting the 4 years) rather than losing their first home savings to super.
This effectively means a FHSA holder can pay a deposit on their first home before meeting the four year rule, and have until settlement date to make further account contributions to maximise their account benefits. Once settlement takes place, no further contributions can be made but the four year rule must be met before their savings can be released and go towards their mortgage.
See more details after the jump.
First Home Saver Accounts - rule changes get green light
Tuesday, 10 May 2011
Changes to First Home Saver Account scheme allowing early purchase finally clear Parliament, bill awaits royal assent to come into effect.
Legislation to improve the flexibility of the First Home Saver Account scheme has passed both houses, exactly a year after being announced in the 2010 budget.
The rule changes will enable money in a First Home Saver Account to be paid into an account holder’s mortgage, if they buy a first home earlier than existing rules allow. While the funds will not be immediately available for use towards a deposit, the account can remain open (with no further contributions allowed) and after meeting the 4 year minimum qualifying period the money will be available to pay down the first home buyer’s mortgage.
Under the original rules, early purchasers would see their FHSA balance forced into superannuation.
First Home Saver Account rule changes - key points:
- Early first home purchasers no longer penalised due to changing circumstances,
- Savings in a FHSA can be paid into a mortgage rather than forced into superannuation,
- Money must still be held in the FHSA until the end of the minimum qualifying period (usually four years),
- No further personal contributions can be made into a FHSA once a home is purchased,
- New rules are not retrospective, and only apply to houses purchased after the new legislation receives royal assent (date TBC – expected within the next month).
This change improves the flexibility of the First Home Saver Account scheme, and is a welcome recognition from the Government that first home buyers want to be able to make purchasing decisions appropriate to their changing circumstances.
Increasing the flexibility of First Home Saver Accounts - public submissions on proposed changes
Monday, 28 February 2011
Submissions supportive of proposed budget changes, but say greater flexibility required.
Public submissions received by Treasury on increasing the flexibility of First Home Saver Accounts are universally supportive of the rule changes proposed in the 2010 budget, but are encouraging the Government to take greater steps.
Leading industry bodies are calling for even greater simplification to address poor take up, with strong appeals to reduce or remove the four year rule.
“While the ABA supports legislative amendments that improve flexibility, we believe further legislative changes, including the removal of the 4 year qualifying rule, is needed to increase the flexibility, simplicity and popularity of FHSAs” said the Australian Bankers Association.
Abacus, the industry body for credit unions, mutual building and friendly societies said “the four-year ‘lock-up’ requirement is too long and is the single most important disincentive for savers. Abacus recommends that the Government should remove or reduce the period of time...”
While the AIST representing the not-for-profit superannuation sector suggested “...inflexibility of FHSAs is a key reason for their poor uptake to date” and “encourages the Government to do more to increase the flexibility”.
Read the submissions here
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