USE FHSA TO BUY YOUR DREAM HOUSE
In an age of growing property rates and difficulty in getting approved for a loan, FHSA would help you to buy your first home. FHSA (First home saver account) would help you to boost your saving. This is a method employed by the government to help those who have a dream of owning their first house in Australia (building or buying).
What is FHSA?
FHSA is a little more than the regular saving account. The money that you deposit in this FHSA should be used only to buy or build your first home in Australia. You cannot use the fund until $1000 is deposited every year for four financial years. For every dollar you deposit in the account up to 6000 dollars, the government would contribute 17% up to 1,020 dollars per year. The tax rate for this saving is just 15%
Will FHSA suit you?
FHSA is for people who can very well afford to deposit 1000 dollars every year. This would help people who are Shopaholics or impulse buyers to save a considerable amount of money. Remember that it is not wise to put all your money into FHSA. You should have a considerable amount of funds in your regular account to make your daily spending. You cannot withdraw the money whenever you need and thus, a dollar in the normal account is not the same as that of a dollar in the FHSA. Thus, you should be in a position to save 1000 dollars every year, without having any plans to use the money in any other area than buying a house. Even if you are planning to get a loan, the FHSA would increase the chances of approval if you have deposited about 20% in the FHSA.
What if I do not want a house?
You can use the FHSA, even if you do not want to buy a house. If you do not use the money for buying a property, the money will be transferred to your super. If you happen to buy a property before four years, then you cannot make any more contribution. The money in the account would be transferred to your mortgage payment.
The only disadvantage in FHSA is that it is not available in all the major banks. You need to search out to find where you could get FHSA. Remember that the money you put in the FHSA will either be used for your property or for your super. You cannot withdraw it or use it for your bill payment. FHSA is provided by a few small banks, building societies and credit unions.