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: We’re 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, subject to meeting the special requirements (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 we suspect a personal loan.
The Department of Human Services, via Centrelink, may give authority for your super fund to release your superannuation benefits on compassionate grounds‘’ for the purposes of ‘mortgage assistance’ if releasing the money will ‘enable the person to make a payment on a loan, to prevent: foreclosure of a mortgage on the person’s principal place of residence; or exercise by the mortgage of an express, or statutory, power of sale over the person’s principal place of residence.”[Regulation, 6.19A (1) (b) SIS regulations 1994]’.
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 DHS also has a broader discretion to allow access to super ‘to meet expenses in other cases where the release is consistent with a ground mentioned’ in the regulation, including mortgage stress.
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 access 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 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.
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 SuperGuide articles provide further information: