Ask LH: What's A Good Alternative To The First Home Saver Account?

Dear Lifehacker, Like thousands of other Aussies, I have a First Home Saver account which will be cut from next year (thanks Abbott!) I was wondering what other good alternatives might be available for people who want to keep saving for a house, but aren't quite ready to take the plunge. Thanks, House Hunter

Sold picture from Shutterstock

Dear HH,

For those not in the know, the First Home Saver Account was an Australian government scheme designed to assist first home buyers to save for homes by offering eligible savers 17 cents of government support for every dollar of savings during a financial year, up to a cap of $935, along with tax concessions for those eligible to open an account in the first place. There were limits on how you could withdraw the money — essentially it had to be for buying a new home, and you had to have contributed at least $4000 over 4 separate financial years.

The removal of the First Home Saver Account is part of the politically contentious 2014-2015 budget, but the reality is that providers have stopped processing new applications so it is effectively dead. In your case, because you've already got an open FHSA, you'll still get the tax concessions until the 1 July 2015.

Saving for a house remains a worthwhile goal, however, so the single best bit of advice despite the First Home Saver Account biting the dust is to keep on saving as hard as you can. Our monthly Ratehacker column rounds up the best deals in everything from credit cards to savings accounts, so that would be a good first port of call.

Cheers Lifehacker

Got your own question you want to put to Lifehacker? Send it using our contact form.


Comments

    What if you already have an account open but have not deposited the required $4000 for 4 years? Is there a way to access these funds now?
    I'm in a different situation of only depositing about $2000 into my account 3 years ago. I stopped using the account after realising my partner and I would be ready to buy a house sooner than the 4 years. Is my $2000 lost to me? I know there was an option to fold it into super but I'd prefer to be able to access it myself

    Last edited 16/06/14 12:40 pm

      Short answer is yes. You'll be able to access them like a normal account from 1 July 2015 as far as I'm aware.

      I am in a similar situation, started in in June 2013 together with my partner and threw $6k each in.

      We started looking for a new place due to change in circumstances, but still did the $6k each again this year to take one last stab at the 17% contribution before it ended. By July 15, we'll have $30,000 to do as we please, with >4k courtesy of the ATO :).

      Before the new announcement, if you purchased a house before the 4 year period, you were able to withdraw the funds and repay your mortgage as soon as the period ended (regardless if you met the 1k in four year rule).

    You're in luck. Have a look at the 2014-2015 budget link in the article.

    It says "Restrictions on withdrawals will be removed from 1 July 2015."

Join the discussion!

Trending Stories Right Now