Many younger Australians want to access their superannuation savings early to turn their home ownership dream into reality, new findings have revealed.
Millenials born after 1982 want to fund a house deposit by using their super savings to get their foot onto the property ladder.
According to a research commissioned by online loan-bidding platform LoanDolphin, of the 1000 respondents aged between 18 and 34, a majority (60 per cent) want to use super savings to end their home ownership woes.
Administration assistant Melissa Hurwitz, 23, and her sister Faye, 24 both live with their mother in her Sydney home and Melissa says despite not paying rent, saving a house deposit has been tough for the pair who are joining financial forces.
“We’ve decided we want to buy an investment property together but we don’t have enough money yet and probably need another six to 12 months of savings,’’ she says.
“I believe property is a good investment but it’s a bit unattainable, at the moment if we put our money together we have about $40,000 (£32,846.12) for a $400,000 (£328,380.27) property but we are looking to buy a $500,000 (£410,610.17) to $600,000 (£492,732.20) investment.
“Using super is a fantastic idea; there’s been times when I’ve had more super in my account than money in my bank account.”
Many lenders allow house deposits of five to 10 per cent but borrowers with smaller deposits will be hit with expensive lenders’ mortgage insurance, a charge that protects the bank, not borrower if the borrower defaults.
LoanDolphin’s chief executive officer Ranin Mendis believes tapping into super should be allowed to help get younger people begin building wealth.
“Given the current housing affordability crisis, the time is right for the government to innovate when it comes to young Aussies and property,’’ he says.
“Saving the required deposit is moving out of reach for many young Australians so they are seeking more innovative ways to save or build a deposit.”
Mendis suggests younger Aussies set realistic monetary goals, get rid of credit cards, work to boost their income and make direct savings from each pay packet to get started.
He says most of LoanDolphin’s customers take about three to five years of consistent savings to buy property.
But the Australian Institute of Superannuation Trustees’ chief executive officer Tom Garcia says while super is a long-term savings vehicle for retirement it’s a band-aid solution to allow this money to be used to buy a home.
“Recognising that declining home ownership is a growing social problem, the super industry is working with the Government to investigate and potentially invest in large scale affordable housing solutions,’’ he says.