Super: an answer to affordability?

There has been a lot of debate about this, but not many have offered a practical approach to solve this problem. I think, allowing first home buyers regulated access to their superannuation, could be the way forward.

Here are practical proposals on how superannuation could assist first home buyers:

Allow first home buyers access to their superannuation balance by way of loans to use as deposit on their first property purchase:

The first home buyer could access the funds by way of a 10-year fixed interest only loan from their superannuation funds. The newly created “first home deposit reserve account” assists with the initial deposit of 25% to acquire their first home. The interest rate on this loan from the super fund would be calculated at the then current market fixed rate and the interest on this loan capitalized. It will be only payable at the end of the loan period in 10 years.

Incentivize young people to save for their deposit:

Allow tax-free status for employee contributions into a newly formed “first home buyers deposit reserve” within their super fund for first 10 years of employment and capped at $5,000 p.a., therefore maximum $50,000.

Allow first home buyer access to employer contributions for the first 5 years of the loan period: By doing so, it will assist the first home buyer with their monthly mortgage payments. This amount would also be paid back to the superannuation fund at the end of the loan period.

All loans are repaid in full with interest to the superannuation fund after 10 years

Managing the commercial loan agreements and the registration of these documents between the super funds and the first home buyer is one area that would require strict oversight. The Government will have to work closely with the banks to protect guarantees and the principle loans made by the super funds to ensure that the property cannot be transacted or offered for other security without formal release letters from the government and or the superannuation fund. This will protect the principle loan to the member to ensure the asset is protected and monies are paid back to the superfund in ten years’ time.

Tenants: do you know what you’re covered for?

Tenants are much less likely than homeowners to have home and contents insurance. But there’s no reason why tenants should be putting themselves in a position where they could be out of pocket from risk of theft and accidental damage.

One misconception from tenants is that they assume their belongings are covered by their landlord’s policy. This is incorrect. The tenant is responsible for their contents in the property. The landlord is responsible for insuring the building and any furnishings provided. And for those young tenants, you should not assume you are covered by your parent’s insurance either, because you’re not.

A common reason for renters not to take out home contents insurance is the high cost, not having enough possessions to make it worth the while, and the fact that it is not considered an ‘essential’.

For many young people balancing increasing rents, credit card debts and the general rise of cost of living, home contents insurance can often be the first expense to go. We buy houses West Virginia

Scrimping on insurance is a false economy. Once you take stock of just how much your possessions are worth, paying for home contents insurance to protect your possessions will seem worth it if anything should happen to your belongings later down the track.

Another reason for renters to acquire home contents insurance is the time it takes to organise the insurance policy. With so many of us being time-poor, researching insurance policies and then setting them up is often a task that is put off from week to week.

As busy as we get, it’s important to set aside some time to get organised with mundane things like organising insurance. Try to set aside some time to jump on the internet and do some
research. Narrow down your research by making a list of top three companies who you think have a suitable policy for you and then contact each one to see who can give you the best deal.

You don’t want to be in a position where it’s too late and you are kicking yourself for not taking out a home contents insurance policy. Don’t put your personal belongings at risk: insure!