First Home Saver Logo
MenuContent

Find us on Facebook

Find us on Facebook

Home arrow News arrow First Home Saver Accounts - new rules now active

First Home Saver Accounts - new rules now active

Print
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.

This is a welcome improvement increasing the flexibility of First Home Saver Accounts, and while some have criticised the lack of retrospectivity, others are encouraging the Government to take greater steps with leading industry bodies calling to remove the four year rule.

A firsthomesaver.com.au poll run over the past year shows 80% of respondents think the rule change will improve take up of the scheme.

But now that the change is here, what do you think? Do these changes make First Home Saver Accounts more attractive? What other changes to the scheme would you like to see?

Have your say in the poll above right, or comment on the firsthomesaver facebook page!




Digg!Reddit!Del.icio.us!Google!Live!Facebook!Technorati!StumbleUpon!Newsvine!Yahoo!Ma.gnolia!Free social bookmarking plugins and extensions for Joomla! websites!
Comments
Add NewSearchRSS
Geoff - Who gets the New Rules?   | | 2011-06-05 10:03:14
Do the new rules apply to Account holders that started saving this year? Before 25th May 2011?
Reply
0 4
Jen   | | 2011-06-26 01:57:09
Yeah Geoff it applies to everyone who hasn't already bought a house. Doesn't apply to people who bought prior to this being made official.
Reply
0 0
LL   | | 2011-06-06 09:30:01
I was happy with the four year rule as I will need at least four years to get my savings together. I thought the whole point of the rule was to encourage people to save regularly over time and get used to contributing to a house before they take the plunge and buy. But, everyone else I've ever spoken to thought the four year rule was bad and a turn-off, so I welcome anything that encourages people to get started saving for a house. I just don't see how they will get their deposit ready in less than four years - good luck to them!
Reply
2 0
James   | | 2011-06-07 08:28:33
After reading a little more about it on the ATO site, I welcome this change. I opened a FHSA 18 months ago, I then purchased an off the plan apartment after 6 months. With the change of rules it means the money I put in there before I signed can still be put towards my apartment. This will mean about 1 year into my home loan I'll receive the funds from my FHSA. If the 4 year rule is removed that will be even better, but either way I'm pretty happy.
Reply
0 0
Jen   | | 2011-06-26 01:58:14
You wont get it into your mortage as you bought before the changes.
Reply
0 7
Mike   | | 2011-06-27 19:20:02
Actually it depends if James has settled on the property. Since he bought off the plan maybe it hasn't been built yet... and settlement is the key date, not paying a deposit.
Reply
2 1
Matt - Is this retrospective?   | | 2011-06-09 09:24:02
"and while some have criticised the lack of retrospectivity, "
I started an account in early May and it has 0 dollars as I was waiting for this regulation to pass before I depoited any money.
If I now put money in, will I be under the new rule or old rule?
Reply
0 0
Tracy - 4 Year rule   | | 2011-06-12 07:51:38
I was also happy with the 4 year rule as it will take me that long to save a decent deposit. I think having it run less than 4 years will intice those some people to abuse the account by depositing money just before they buy so they get the government co-contribution.

One of the reasons that I opened my FHSA is that I can't get the money out easily. Very handy for someone who spends all their savings. And if I don't use the money to buy, then at least I can get it when I am 65 and need it.

My question would be: If you bought a house after 2 years, how can you satisfy the $1000 per year for 4 years rule if you are no longer able to make contributions after settlement?
Reply
6 1
Anonymous - concerned mother   | | 2011-07-10 15:41:17
I agree, does anyone have the answer to this one question of depositing the further required $1000 for the rest of the years
Reply
0 0
Mildred - Lack of Retrospectivity   | | 2011-06-15 16:42:04
I believe this law unfairly excluded depositors prior to May 25, 2011. The intent for which the FHSA is availed of is for the purchase of a first home, regardless if it was done prior to the passing of this new law. Sad to say, but this law is arbitrary and would not encourage new FHSA depositors.
Reply
2 0
Pablo - none retrospectivity   | | 2011-06-20 00:21:04
the rules are not retrospective mean i am not getting my money out to offset my mortgage just because i bought my unit before the new rules effective date. it's not fair and new rules mean nothing to us who had been saving up for 2 years and bought the unit just weeks before 23rd May.
Reply
1 0
Jen   | | 2011-06-26 01:59:43
Surely you were watching and knew the rules were coming in?? Why would you buy before they were ratified, madness!
Reply
2 1
Nik   | | 2012-01-18 09:07:18
You purchase when the time is right. My now husband and I did, but he put $13,000 into one of these accounts based on info his father told him and not reading the info himself, needless to say he is kicking himself now and his father 'tries' to keep us updated but had his father actually listened when he asked my opinion about the account we would be in this situation.
Reply
0 0
Vincent   | | 2011-06-28 21:36:39
my wife opened her fhsa last october, we are looking at buying in 2013... i guess we won't be able to use the savings to offset our mortgage until the July 2014...

the government contribution on the first $5,500 is too low. the government needs left it to the first $11,000.
Reply
0 0
Kee   | | 2011-06-29 00:36:38
What happens, if I set up a FHSA, purchase a home soon after, but 4 years later my home has become an investment property? Can I still put my savings towards my mortgage?
Reply
0 0
Jaye   | | 2011-07-09 09:04:02
Keep in mind guys, the rule is that you need to make a contribution in four financial years. Depending on when you make your contributions this could actually means you could have satified the rule in 2 years 2 days.

i.e. contribution on the 29/06/11
contribution on the 29/06/12
contribution on the 29/06/13
contribution in the 01/07/13

This would actually mean you satisfy the rule in 2 years. Contritbutions have been made in 4 four financial years.
Reply
2 0
vicky - this is awesome   | | 2012-02-05 21:36:00
hey, so is this true??? so i cld put something in financial yrs june 2011, june 2012, june 2013, july 2013. so this is cinfirmed? wld i have to wait until the end of that financial year to get my funds?
Reply
0 0
Karen   | | 2011-07-26 13:07:30
my son has a FHSA for the past year, after investigation into house prices and loans, it seems he will not be able to loan enough funds to purchase a house in current market where he lives, his employer has given him a flat (no cost) to live in, but the banks will let him have additional funds if he buys as an investment property and rents out. What are the implications of the FHSA can it still go against the investment properties mortgage????It is still a genuine mortgage, where do a get info on this????
Reply
0 0
Jenna   | | 2011-08-01 11:50:38
You cant use a FHSA to buy an investment property. However if you dont live in the investment property at all, you can still use the FHSA account to buy the first house you will live in.
Reply
0 0
Nicole   | | 2011-08-17 23:04:03
It may well be a genuine mortgage Karen (though I've never heard of a fake one)however it doesn't apply to investment properties.
The money can only be withdrawn in certain circumstances around a home, not an investment property, caravan or boat (unless you fix it to land you own)
Basically to qualify, you must live on the property for at least six months and it must be your main residence

Once you have closed and withdrawn the balance of your account you must live in the home for at least six months within a year of either settlement, or within a year of construction should you be building the home.

Check out the ATO site here: http://www.ato.gov.au/individuals/pathway.aspx?pc=001/002/066 for more info
Reply
0 0
Renee   | | 2011-08-06 11:17:48
If you can't contribute to the account if you buy before the four years, what's the point?

A better version would be if you could keep making contributions, so you could get a larger clump of savings towards the mortgage when the 4 years expired.

I was seriously considering getting one of these accounts, but knowing that I will probably buy before four years, not being able to continue to make contributions has changed my mind. For me, getting the deposit and paying the mortgage will definitely be possible while making contributions, but a nice lump sump after 4 years would be a huge help (especially as around that time we'll be thinking of having children)
Reply
0 0
John - Mr   | | 2011-08-11 13:11:30
The legislation should be retrospective, it is unfair to penalise people just because their circumstances changed and they bought a house before the legislation came in. It has really disadvantaged those people who wont be able to access these funds once rolled over into Super for however long.
Reply
1 0
Josh   | | 2011-09-02 11:22:33
I opened my FHS account on 15 June 2011 and made a $5,500 contribution on 22 June (before the end of the financial year).
Should I be entitled to the Government co-contribution for 2010/11 FY?
I just looked at my account and it seems that I haven't received anything from the Government yet...
Reply
0 0
Tamar   | | 2011-09-16 14:59:33
You will get the government contribution Josh, it just takes quite a while for it to come through. I rang the ATO about this a couple of months back as I too contributed money to my FHSA before the end of the financial year and am yet to see the government contribution come through. The ATO said that the bank/credit union you hold your FHSA with has several months to declare what you contributed and the govt then has a further few months before they have to deposit the money. But fear not, you will get it eventually!!! :)
Reply
0 0
Vira - Need more explanations on earl   | | 2011-09-19 23:25:55
Hi everyone,

I still do not understand this scheme much. I will be very appreciated if any one can help answering my following questions.

I have not had any FHSA.

1) What will happen if I want to use early the fund to buy a house before meeting 4 year rule?

2) Will the fund from FHSA be deposited into my mortgage? or I have to wait until meeting 4-year rule for the fund to be available?
Reply
0 0
Ben - Mortgage Broker   | | 2011-09-22 09:43:15
So people STILL can't use their savings towards a new home within 4 years of opening the account? The new rules are of course welcome, but until the 4 year rule is removed the takeup will continue to be minimal. Remove the 4 year rule and you'll get serious takeup. Perhaps a reduction to 6 months would be good, as that's what the majority of lenders and mortgage insurers want to see to demonstrate "genuine savings".
Reply
1 0
Rahul   | | 2011-11-30 18:25:05
So does this mean that I can use the funds that I have in my FHSA as my 10% deposit for my first home or does that mean that those funds will only be released after the 4 years is up and used as a down payment towards my mortgage? It's very confusing what that means.
Reply
0 0
moneyCat - Stressed about FHSA   | | 2011-12-09 13:32:40
I need advice on my first home savers account and HELP debt.
I am going overseas next year and am not sure for how long, I am not sure if I want to keep my FHSA open as I don't plan on buying a house in the next 3 years, but it might change in the next 7. I have about $2900 in the account. I will not be depositing anymore money into the account from now on and don't know if I will in the future, as I will be spending and saving my money overseas for travel and living. Should I close the account and have the funds transfered into my super or keep it open to oneday save more money?
I'd really appreciate your advice.
Reply
0 0
Pip   | | 2011-12-15 10:28:45
If I buy within the four years, (or let's say, within the first year) and I can't make any contributions after settlement date, how can I fulfil the requirement of at least depositing $1000 a year over the four financial years? Or does that not matter once you can't make any more contributions?
Reply
0 0
Write comment
Name:
Website:
Title:
Security Image
Please input the anti-spam code that you can read in the image.
Get the latest updates...
Subscribe to our free alert system and get the latest updates regarding the First Home Saver account scheme.



*We will not spam you or pass your email address onto any third parties.
View our privacy policy.

Polls

Do the recent changes make First Home Saver Accounts more attractive?
 
First Home Saver Calulator

Latest News

Most Read Articles: