Because the thought of trying to save up for your first home is daunting.
So often these days we see kids heading off to study at University, which is GREAT! However….. it means that they are living at home longer as it puts off their ability to work full time, from anywhere between 3 to 10 years.
So how hard is it for our kids to save to buy their first house?
(and yes, all of those $4.50 coffees and smashed avo brunches probably aren’t helping them get into their own home any sooner [shout out to the $10 ‘Retirement Plan’ smashed avo dish!] , but can we all agree, how good do they taste! Well that and I don’t know how you expect anybody to live in Melbourne and NOT drink coffee)
So the government has decided to lend them a helping hand to reduce pressure on housing affordability, in their usual over complicated and maximum effort sort of way.
They have introduced the First Home Super Saver Scheme (let’s call it FHSSS because that is a mouthful and a half)
This scheme now allows people to save for their first home through their Superannuation funds.
Why is this a good thing?
Because it will help first home buyers save faster with the concessional tax treatment of super.
So now you are looking at getting an interest rate of around 7-8%, as opposed to the current 1.5% cash rate (aka. Rate of interest).
You can make contributions at any stage, however can only apply for its release once (and you have to be at least 18). There is also a cap of $30,000 on the voluntary contributions that you can withdraw under this scheme, (but you also get to withdraw all of the interest that comes with it – Cha-Ching!).
It’s a good start to helping our kids get into their own home (and out of ours) faster!
The median house price in Melbourne it currently sitting at somewhere around $900,000.
Now if they were looking at a house valued around $700,000, their 20% deposit is sitting around $140,000 (or 8,000 smashed avos).
And whilst this is a big number, there’s a few things out there to help them achieve it.
We want to teach our kids healthy financial habits, and help them to make one of the biggest investments of their life.
If you’re a little intrigued (or a little confused) about how it all works, give us a call and we’ll be more than happy to talk about it with you, and have a look at the best steps for implementing an effective savings scheme.