As you may be aware, the Australian Government allowed Aussies’ early access to their Superannuation to help those financially impacted by the economic slowdown caused by COVID-19. The scheme allowed you to apply for one-off access in the 2019/20 financial year of up to $10,000 from your super.
The ongoing crisis then saw the scheme reimplement in the 2020/21 financial year, with a new application required to access a further $10,000. Meaning that even if you accessed your super in the previous financial year, your eligibility needed to be reassessed the following year.
This all sounds great, especially if you are experiencing financial difficulty due to COVID-19, to help aid in paying bills, rent, or get you out of debt. However, a recent study has shown that nearly half (40%) of those who accessed their super early, actually saw no drop in their income during the crisis. So the question is, how could this hurt your home loan application?
Well here is the problem.
While lenders have advised that those taking advantage of most of the COVID support schemes would not be penalised on future loan applications, the majority of them are not open to those who have accessed their superannuation early. The reason being, for you to be eligible to access your super early, you had to demonstrate that you had experienced financial difficulty as a result of COVID-19.
Unfortunately, you won’t be able to escape this admission when it comes time to apply for your new home loan. So if you accessed your super early ‘just in case’, it is almost impossible to argue that you can meet your future home loan repayments, when there are records that you took this money out of your super due to financial distress.
So, if you are looking at purchasing a new property & applying for new lending, we highly recommend avoiding withdrawing any of your superannuation if you can. This is going to increase your serviceability with the lender & make your home loan application much easier.
It is important that you get in touch with our team, so that we can discuss your options and help you. We can also help you by putting a budget & bank account structure tailored to your needs, to assist you in staying on top of your expenses during this difficult time.
Disclaimer: This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply. © 2019