I have a young adult who has just secured a stable job contract and would like to buy a house in a few years time. Someone mentioned a first home saver account (which I didn't know about) and I thought that the info might be helpful. It's a 4 year savings plan with a generous government interest. It's important to make the right decision as to whether it's the right account for you but for those who struggle to save it sounds like an beneficial plan. For more info...
What are first home saveraccounts?
Unlike other savings accounts, a first home saver account canonly be used when you are saving to buy or build your firsthome.
Each year the government will make a 17% contribution on thefirst $6,000 you deposit each year. This means that if you deposit$6,000 in one financial year, you will receive $1,020 from thegovernment.
Some of the main features of these accounts are:
- The interest you earn on the account is only taxed at a rate of15%.
- You have to save at least $1,000 each year over at least 4financial years before you can withdraw the money. These 4 years donot need to be consecutive.
- The maximum account balance is capped at $90,000 but this capwill be indexed in future years. After your savings reach thislevel, only interest and earnings can be added to the balance.
- The money has to be used for your first home. If it is not, itis added to your super and you can't access it until you areretired or can meet another condition ofrelease.
- If you buy your first home before the 4 year period is up, youcan withdraw the money in your account at the end of the 4year period to put towards your mortgage. You will not be ableto make any more deposits once you have built or bought aproperty.
First home saver accounts are available from:
- building societies
- credit unions
- friendly societies
- life insurance companies
- super funds
How to get a first home saver account
You should search the internet to find which financialinstitutions offer first home saver accounts. Make sure you aregetting a good interest rate, with no or low fees.
To get an account all you need to do is contact one of thecurrent providers. Make sure you read their product disclosurestatement before you sign up.