Q: I owe approximately $190,000 to the bank on my 2-bedroom unit, and I would like to know if I can invest my $60,000 of super into the unit to reduce my mortgage repayments to the bank?
Superannuation is subject to special access rules called preservation. What this means is that you cannot access your super benefits until you retire after a certain age, or you satisfy another condition of release such as permanent disability or severe financial hardship. I explain the conditions of release in the article Accessing super early: 12 legal reasons to access your super.
In normal circumstances, before someone retires, it is not possible to access a super account in the same way as a bank account, in order to withdraw cash for mortgage payments. On retirement however, you can cash out your super benefits.
Note: If an individual is struggling to pay a mortgage, and the bank is about to foreclose on the property, then it may be possible to access super benefits on ‘compassionate grounds’. The Department of Human Services (DHS) administers this process, according to strict criteria.
DHS may release your super for the purposes of ‘mortgage assistance’ if releasing the money will “prevent your home from being sold by the lender with whom you have the home’s mortgage”.
The grounds for early release do not include payment of rent, or a mortgage payment:
- where there may be future difficulty in paying, but the payments are not yet behind
- for payments that are behind, but the bank/lender has not yet decided to sell the property
- for a property or debt owned by one of your children or other family members or dependants
- for an investment property.
DHS also provides more details on the information required, including a special form, before such an early access application can be considered. You can view the information and forms by clicking on this link here.
Note: If you are considering applying for early access to super, also check that the specific rules of your super fund permits a fund member to withdraw money under these circumstances.