First Home Saver Account

While the drop in house prices has been bad news for a lot of our parents, some economists are starting to suggests it’s merely a case of a market balancing in the wake of overvaluing property. In other words, it’s a great moment to buy a first apartment or house at what is a realistic price, as opposed to the skyrocketing rates of previous times.
To help with this, no small task irregardless, the government initiated a program called the First Home Saver Account in 2007. It was remarkably unsuccessful, considering the benefits available from the account. Currently, of the big four banks, ANZ is the only one to still offer the account, the rest of the providers are mostly credit unions. This account could be a useful tool in saving to make your first plunge into the housing market. Here are some of the ins and outs of the account and why you should consider opening one up.

What Is The First Home Saver Account?

A First Home Saver Account is more like a term deposit than a savings account, as it has a set time limit before you can access the money. It also comes with certain conditions; the money can be used only for a house deposit, or some other essential aspect of home-buying. It can’t be withdrawn before the time limit. Also, it’s stipulated that you contribute a minimum of $1,000 over a minimum of 4 years. Otherwise, you are judged ineligible and your money goes into your super.

Setting Up The First Home Saver Account

Once you’ve set up an account, you can contribute, your family can contribute and the government will contribute 17% of your contributions for the year, up to a limit of $6,000. Once you’ve reached the cap on the account which, this year is $90,000, you can’t contribute any more, although interest and government contributions can still be entered into the account. Your home saver account interest is only taxed at 15%, mak
ing it an appealing alternative.

Where Can I Get A First Home Saver Account?

Banks, building societies, credit unions all offer first home saver accounts. They provide interest on your account balance. A full list is at the Australian Prudential Regulator Association. The ANZ, as mentioned, is the only one to offer a home saver account of the Big Four, with a variable interest rate and no fees. The highest rate is offered by Members Equity, with a cool 5% and no fees.

What Questions Should I Ask When Signing Up?

Ask to see a Product Disclosure Statement before signing up to any account. There’s a full list of registered providers at the Australian Prudential Regulation Association, so be sure to check the list for your account. There’s also a 14 day cooling off period, where you are allowed to change your mind and collect your balance. You will still be fully capable to opening another first home saver account.

Benefits Of Using A First Home Saver Account (FHSA)

Not only does a first home saver account offer a structured, relatively easy approach to saving your first house deposit, it provides a couple of opportunities. First, the co-contribution of the government is a helpful addition, at up to 17% of your contributions. Then, there’s the interest on the account. A first home saver account also doesn’t restrict your from receiving the first home owner grant, which can be extra money with which to purchase your dream home.