Q: I’m 24. I am currently paying off my house but I have a loan which a debt company bought off the bank. They sent me a letter of demand saying I have until the end of the month to pay the amount or they are going to take my house. Is there any way I can take out my super to pay that so I don’t lose my family home.
A: I’m sorry to read about your circumstances. The first step is to check whether your super fund will allow you to access your super benefits early (some super funds don’t), and if they do, then you can consider what options are available.
Based on your question, the loan that is causing you the issue is not your home loan but I suspect a personal loan.
The Department of Human Services may release your super on ‘compassionate grounds’ 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 information you provide hints that the loan at issue is not your home loan, but rather a personal loan, so you may not be able to access your super benefits early, unless you satisfy the specific grounds set out by the Department of Human Services. Note that the exercise by the mortgagee of an express, or statutory, power of sale over the person’s principal place of residence is considered grounds for early release.
The general rule is that early access to super benefits is not usually possible for the purposes of paying regular mortgage repayments. Although the rules for accessing super benefits early are quite strict, the super rules do permit early on compassionate grounds if a bank is about to foreclose on a fund member’s home.
The Department of Human Services administers this process, according to strict criteria. The grounds for early release do not include payment of rent, or a mortgage payment:
- where they 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.
The Department of Human Services (DHS) also provides more details on the information required before such an early access application can be considered. You can view this additional information on the DHS website by clicking on this link.
Note: If you are successful in accessing your super benefits early, you can expect to pay benefits tax on the benefits that you receive.
The following links/articles should also assist you with the steps involved:
- DHS website page explaining the specific compassionate grounds
- Accessing super early: Is it possible to withdraw super to pay overdue rent?
- Super for beginners, part 10: Can I use my super to reduce my mortgage?