Your super is not a deposit for your first home
With millions of people participating in the government’s early release of Super campaign, financiers and lenders are not looking at this very favourably. Many have sought to access their super and use this as a deposit for their first home, without realizing the pitfalls of this strategy.
From a financing perspective, there are a number of reasons why a prospective borrower can be denied a home finance application, such as having a poor credit rating or not having the correct documentation. Another big reason is not having a high enough income or a stable job, and if you’ve had your working hours reduced to the point where you’re eligible to withdraw super, you might be rejected for finance anyway.
If someone has accessed their super with the intention of topping up their deposit so that they can purchase a property in the near future, they should keep in mind that financiers are unlikely to look favourably upon this as accessing super would indicate financial hardship and lack of cash flow stability. If you’re eligible to make the withdrawal under the COVID-19 Super release scheme, it means that your hours or income has dropped – or you’ve lost work altogether. This directly impacts your capacity to borrow, if you’re looking to enter the housing market over the coming 18-24 months.
Ideally, one should be keeping their super where it is – it’s designed for retirement, not as a deposit for their first home.