For many Australians, buying a home is one of life’s biggest financial goals. But with rising property prices, saving for a deposit can feel like an uphill battle. As housing affordability remains a hot topic, a question that often comes up is: can I use my superannuation to buy a home? Here, we’re finding out.

In this article, we’re diving into the various ways you could tap into your super to buy a home. While these strategies shouldn’t be treated as financial advice, they're designed to get you thinking. As always, speaking to a licensed financial adviser is a must to find out what’s right for your situation.

1. Using the First Home Super Saver (FHSS) scheme

For first-home buyers, the First Home Super Saver (FHSS) scheme is one of the most direct ways to use your super to buy a home. This government initiative allows you to make voluntary contributions to your super, then withdraw those contributions (and the earnings) when you're ready to buy your first home.

Under the FHSS scheme, you can contribute up to $15,000 per year, with a lifetime limit of $50,000. You can choose to contribute before tax or after tax. When it’s time to buy, you can take out these funds to help build your deposit.

Potential benefits

• Tax advantages : You may pay less tax on your contributions , meaning your savings could grow faster than they would in a regular bank account
• Investment returns: Because your money is invested through your super fund, it has the potential to earn higher returns compared to keeping it in a standard savings account

Drawbacks

• Eligibility and limits : There are caps on how much you can contribute and withdraw, and you must meet certain criteria to access the scheme
• First-home buyer rule : If you’re buying with someone else, they also have to be a first-home buyer for you to use this option

2. Paying off your mortgage with super in retirement

Have a mortgage lingering into your retirement years? One option is to use your superannuation to wipe out the rest of your home loan once you hit preservation age (55 to 60, depending on your birth year) and retire. This can give you peace of mind, knowing you’ll enter retirement free of monthly mortgage payments.

Once you retire and have access to your super , you can draw on these funds to pay off any remaining mortgage balance.

Potential benefits

• Debt-free retirement : Eliminate the stress of mortgage repayments, so your retirement income can go towards living expenses, travel, or hobbies
• More cash flow : Without a mortgage, your budget frees up, giving you more flexibility in retirement

Drawbacks

• You’ll need a big super balance : Using a large chunk of your super to pay off your mortgage could leave you with less money to cover other expenses during retirement
• Early depletion risk : Reducing your super balance early could mean you run out of money later in retirement

3. Buying a home outright with super once you retire

If you’ve done a great job of building up your superannuation balance , you might be able to use it to purchase a home outright when you retire. For retirees looking to downsize or move to a new location, this strategy could allow you to buy a home without taking on any new debt.

Once you retire, you can withdraw a lump sum from your super to purchase a home outright, enjoying the freedom of living mortgage-free.

Potential benefits

• Debt-free home ownership : Enter retirement without the financial burden of a mortgage and live in your ideal home
• Potential for wealth-building : Depending on the property market, buying real estate could help preserve or even grow your wealth

Drawbacks

• High super balance required : This strategy requires a large amount of super, and withdrawing such a large sum could leave you financially strapped for other retirement needs
• Market risks : As with investment, real estate values can fluctuate , so there’s a risk your home may not grow in value

Depending on your strategy, consider these approaches

The right approach to home ownership using your super depends on your individual financial goals and timeline. Here are some strategies that could help you reach your home ownership dream – whether you’re contributing to the FHSS, planning to pay off your mortgage, or buying a home outright in retirement.

Making extra contributions to the FHSS scheme

If you’re aiming to use the FHSS scheme to boost your deposit, you could supercharge your savings by contributing extra. Since these contributions may benefit from tax concessions, you can potentially build up your deposit faster than with a standard savings account.

Fictional case study

Priya, 30, has been contributing $15,000 a year to her super through the FHSS for the last three years. By maxing out the FHSS scheme’s annual limit, Priya has saved up $45,000 (plus earnings) to use toward her deposit. This boost allows her to purchase a home sooner than she would have been able to through traditional savings.

Contributing extra to super to pay off your mortgage later

For those already on the property ladder, you might choose to contribute extra to your super , then use the excess to pay off your mortgage once you retire. This can be an effective way to gradually build up a lump sum in your super that you can draw on to become mortgage-free.

Alternatively, you could focus on building a larger super balance to supplement your income in retirement. This may allow you to manage your mortgage repayments more comfortably or even pay off your mortgage earlier than planned.

Fictional case study

Arjun and Mei, both in their 40s, have 20 years left on their mortgage. They decide to contribute extra to their superannuation with the aim of using the excess to pay off the mortgage in one go when they retire. By contributing an additional $20,000 a year, they are on track to achieve this goal. Upon retiring, they use their super to clear the mortgage, entering retirement without debt.

Saving outside of super for more flexibility

Not everyone wants to lock their savings into superannuation. If you’re looking for more flexibility, saving for your deposit outside of super might be a more appealing route. While you miss out on the potential tax benefits of the FHSS scheme, you could still build a deposit in a high-interest savings account or other liquid investments, keeping your money accessible.

This strategy may be worth considering for those who want to buy a home before accessing their super or prefer more control over their savings.

Fictional case study

Yusuf, who’s in his late 20s, decides to save for a home deposit outside of super. He puts aside $1,000 each month in a high-interest savings account, allowing him easy access to his savings when he’s ready to purchase. Within five years, he’s saved enough for a 20% deposit on his first home.

Focusing on paying off the mortgage before retirement

For homeowners, there’s often a tough choice between putting extra money into your super or paying off your mortgage sooner. Paying off your mortgage can give you the benefit of reducing debt and interest payments , while contributing to super offers potential tax perks and long-term growth.

This strategy may suit those who want to enter retirement without mortgage payments hanging over them, freeing up more of their retirement income for other expenses.

Fictional case study

Leila and Marco, both in their 50s, still have a significant mortgage balance. Rather than making additional voluntary contributions to their super, they decide to focus on paying off their mortgage before retirement. By redirecting their surplus income to the mortgage, they manage to pay it off five years ahead of schedule, entering retirement with more financial freedom.

Finding the right path for you

There are several ways to use superannuation as part of your home ownership strategy, whether directly or indirectly. But there’s no one-size-fits-all answer – it all depends on your financial situation, goals, and timeline.

Before making any big decisions, it’s important to speak with a financial adviser who can help tailor a plan to your unique circumstances. Ultimately, the best strategy is the one that works for you and sets you up for a secure financial future.

Until then, happy investing!