Saving for your first home can be incredibly difficult, especially when you’re young and maybe on a low wage, or perhaps still studying.
But, there is a helping hand out there – one that is relatively unknown to the majority of people trying to save to buy their first home.
As part of the Labor’s 2007 election pledge, that following year while in Government, it introduced the First Home Saver Account to help Australians get into their own home faster.
In a nutshell, the Government will pay you 17 per cent on the first $5500 (which is indexed) of individual contributions made each year – that’s $935 per year – for free! You can also save up to an account cap of $80,000.
There is a catch: First Home Saver Account holders must have their funds in the account for at least four years. After this time, they will be able to withdraw the funds tax-free in order to buy a house. You’re also still eligible for the First Home Owner’s Grant, and if you’re buying as a couple – you can both have a First Home Saver Account.
“If you’re already trying to save, it makes sense to open one of these accounts to access the interest the government will pay,” she said.
“It really is money for nothing, and if you read the fine print – you don’t have to have the funds in the account for four full years.
“The accounts run on the financial year, so if you deposit money on June 30 – it is considered that you’ve had your funds deposited for a “year”.
“The same goes when you withdraw – if you withdraw on July 1 it is considered a full year, so you can cut that four years down to three.”
To open an account, you must be between the ages of 18 and 65 and have not previously purchased or built a first home.
Banks, building societies and credit unions will be able to offer deposit accounts and superannuation providers, life insurers and friendly societies will be able to offer investment-linked accounts.
For more information on First Home Saver Accounts, go to http://www.firsthomesaver.com.au/ or http://www.homesaver.treasury.gov.au/content/default.asp.
To calculate how much you could save go to http://www.firsthomesaver.com.au/calculator/.