Home collateral Use retirement pension to buy a house? how could it work

Use retirement pension to buy a house? how could it work

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A housing affordability survey has raised the possibility of allowing young Australians to use their superannuation as collateral to buy their first home.

The House of Representatives report tabled Friday revealed a number of recommendations aimed at improving housing affordability and supply across the country.

Among the sixteen recommendations, a key measure included the use of superannuation as collateral for first-time home buyers looking to grab a slice of the property market.

After a year of unprecedented real estate growth, with the total value of the Australian real estate market approaching $10 trillion, Chairman of the House of Representatives Standing Committee on Taxation and Revenue, Jason Falinski, MP, said it was increasingly difficult for young Australians to be able to afford a home.

“Most people focus on house price, but the biggest barrier to entry for young Australians is saving for the deposit,” Mr Falinski said in the report.

“On all the different measures, the time it takes for a worker on the average wage to save for a deposit has gone from a number that could be measured in months to one that can be measured in a decade.”

Recently, the National Housing Finance and Investment Corporation (NHFIC) revealed that the time needed to save for a deposit has doubled since the early 1990s, from four to eight years.

The House report’s recommendation pointed out that first-time home buyers should be able to use their super as collateral for a home loan, given that paying off a mortgage is a very common way to save for retirement .

“This would reduce the deposit required to enter the housing market and have a similar effect to allowing access to the super,” the report said.

“Under this approach, super sales would only be reduced if the first home buyer defaults on their home loan, which is an unexpected and infrequent occurrence in Australia, limiting the negative impacts on young Australians and women.

Mr. Falinski said tThere is significant evidence that the main barrier to entry into the housing market is deposit, and the use of superannuation as collateral could alleviate this pressure.

“Survey after survey has found that ownership of your home is the most important factor in determining financial security,” Mr Falinski told Savings.com.au.

“This idea lowers that barrier; that’s why it’s only beneficial for the first house.”

Resolving supply issues remains top of mind, with the Committee recommend that the Australian Government implement policies that financially incentivize state and local governments to adopt better planning and property management practices.

“The federal government must encourage state and local governments to empower communities to make their own choices and trade-offs, while delivering real benefits to those who bear the costs,” Falinski said in the report.

“These benefits should include better transportation infrastructure, improved local amenities, and the assurance of protections and preservation of surrounding areas guaranteed by law, not just meant to be shattered within a few years.”

EIS Chief executive Graham Wolfe said the country will need to build 1.66 million homes by 2030 just to meet the demand from the growing population.

“The housing affordability challenges facing Australian households can only be solved if the to supply housing can match demand,” said Wolfe.


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Lender

Rate Type Gap Redraw Ongoing charges The initial costs LVR Lump sum reimbursement Additional refunds Pre-approval

Variable More details
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Variable More details
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Variable More details
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Variable More details
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  • Redraw – Access your extra payments if you need them
  • Use the app for loan information to help you pay off your home loan faster

Variable More details
REFINANCING IN MINUTES, NOT WEEKS

Owner Occupied Variable, Principal & Interest (Refinance Only)(LVR
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Variable More details
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Basic criteria: a loan amount of $400,000, variable, fixed, principal and interest (P&I) real estate loans with an LVR (loan-to-value) ratio of at least 80%. However, the “Compare mortgages” table allows calculations to be made on the variables selected and entered by the user. All products will list the LVR with the product and price list which is clearly published on the product supplier’s website. Monthly repayments, once the basic criteria are modified by the user, will be based on the advertised prices of the selected products and determined by the loan amount, repayment type, loan term and LVR as entered by the user. user/you. *The comparison rate is based on a loan of $150,000 over 25 years. Please note: this comparison rate is only true for this example and may not include all fees and charges. Different terms, fees or other loan amounts may result in a different comparison rate. Rates correct as of March 22, 2022. See disclaimer.


Image by Ivan Babydov via Pexels

The whole market has not been taken into account in the selection of the above products. Instead, a reduced portion of the market was considered. Products from some vendors may not be available in all states. To be considered, the product and price must be clearly published on the product supplier’s website. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au and Performance Drive are part of the Savings Media group. In the interest of full disclosure, Savings Media Group is associated with Firstmac Group. To learn how Savings Media Group handles potential conflicts of interest, as well as how we are paid, please visit the website links at the bottom of this page.