Home Loan after Withdrawing Money from Super?

Has anybody here had any luck getting home loan approved after withdrawing money from super under Covid early super release scheme?

Comments

  • +13

    good luck with the ATO audit

  • +27

    I reckon if you need to withdraw $10k from your super you are probably not in the financial position to have a mortgage

    • Or at least it is a huge red flag to lenders you are in hard financial circumstances and a poor credit risk.
      Maybe in a few years.

  • Banks will assume you had a reduction in hours/income if you were eligible for super release.
    i know CBA and NAB have been clear that they wont consider Super Release funds as Deposit funds (saving history etc)

  • +14
    • I wonder if he's living in it.

      • +5

        Wait, ended up with a BMW

        Good ole high-yield investments

        • Good ole high-yield investments

          As recommended by the experts, god bless 'em.

        • +1

          obviously the investment returns high yield

  • +3

    Is this you?

    “When I found out that I could access that money and put it towards my future now, I went for it,” Matt, 26, told Business Insider Australia.
    “Since getting the money and going down countless avenues to sort out finance, we have found that no financial institutions want to touch us because of ‘financial hardship’,” Matt said.

    • +2

      Lol.

      No loan, no house, damaged credit rating and an ATO audit.

    • +1

      “It’s interesting that this early access scheme has been more popular than the government’s First Home Super Saver Scheme,” she said. - What a surprise, blow me down

  • +3

    Nice try ATO officer

  • +5

    grabs popcorn

    This is going to be a fun thread lol

  • Do it let us know

  • +1

    Hold onto the money, you're going to need it. Considering if what the deputy CMO saying is true that vaccine is 18 - 24 months away.

    • -2

      Yes they are so close to shrinking the 5g tracking chips small enough to fit inside a vaccine. Should be ready within 2 years.

  • Just for your benefit, the early release of super is only for the following circumstances. None of which i'd imagine would allow you to buy a house, let alone apply for a loan. The only circumstance i can see working is if you were temporarily out of a job and found a new job after applying for the early release of super.
    If none of these circumstances apply to you i'm afraid you might be out of pocket a fair amount once the tax man comes knocking.

    you are unemployed
    you are eligible to receive one of the following
    JobSeeker Payment
    Youth Allowance for job seekers (unless you are undertaking full-time study or are a new apprentice)
    Parenting Payment (which includes the single and partnered payments)
    Special Benefit
    Farm Household Allowance

    on or after 1 January 2020 either
    you were made redundant
    your working hours were reduced by 20% or more (including to zero)
    you were a sole trader and your business was suspended or there was a reduction in turnover of 20% or more (partners in a partnership are not eligible unless the partner satisfies any other of the eligibility).

  • +1

    Why not plastic surgery? or a new car, wait you got a new BMW, never mind

    "Australians spending retirement savings during the COVID-19 pandemic | 60 Minutes Australia"
    https://www.youtube.com/watch?v=6QceLke4cxg

  • +6

    You've just signed official paperwork saying that you're under Severe Financial Hardship.

    I've got no idea why there's not a queue of people offering to give you money. /s.

  • +1

    One lender told me they don’t give home loans to people who are on jobkeeper.

    • lots are deducting the amount of job keeper from your income. So if you previously earnt less you now earn less than $0 and if you earn more, that amount is reduced by $1500.

  • I understand the scepticism of majority. Nonetheless, leaving ethical part aside, let's have a look at practical side of things.

    It's hard to argue with advantages of early super withdrawal:

    Firstly, the threshold is pretty low: you have to show 20% cut in one pay period to qualify (correct me if I am wrong).

    Secondly, you are to lay hands on tax free cash (up to $20K) with no visible downsides. I don't see why early super withdrawal would negatively affect your credit rating. Is super fund a credit reporting agency?

    Some may say that you are robbing your future. However, given that we are just at the very early stages of pandemic with no cure in sight, I believe that it would be safe to assume that markets are bound to fall. Just two weeks ago there was some hope in sight but now it's obviously an uphill battle. Under the circumstances partial/or full super withdrawal may be a smart move. In worst case scenario vast majority will be able to have enough in their super by retirement age.

    Where to reinvest your $20K (RE, mortgage, offset, investment cars, travel etc) is a different issue though.

    • It's hard to argue with advantages of early super withdrawal:

      Would the taxman knocking on your door change your mind?

      negatively affect your credit rating

      If you ask for a loan, the bank can see you withdrew super. Early release = dole bludger = no loan for you.

    • I agree 100%. I had 20% reduction in one pay period and given how vague the rules are I doubt that taking money out of my super would get into any trouble.

      This $20k is only small portion of my deposit which is roughly $110k…

      • -1

        And you still can't get a loan.

        Well done.

        • I haven't applied for one or talked to broker yet, I was just asking if anybody here did.

          • @bion83: Do let us know how you get on.

  • -1

    I think you are overestimating capabilities of ATO. They will not be able to audit several million people.

    Even if you get "lucky", all you have to do is to show them one (!) legitimate payslip indicating 20% drop in your hours in pay period.

    Not sure if banks get info from super, so I do not see any issue here (correct me if I am wrong). However, if you voluntary decide to declare withdrawals as your earnings when applying for a loan then it is a different matter. No lender will appreciate it.

    Don't you think that partial release of super (so people can spend it thus keeping economy afloat) is a deliberate move by the government? They did not do anything to prevent it even after numerous reports of apparent misuse of funds.

    • overestimating capabilities of ATO.

      That's only a secondary concern.

      The primary one is the bank, early withdrawal of super bumps your risk stats up a bit. After all, @OP is after a loan.

      • -1

        Probably. But how will the bank know about super withdrawal?

        • Golly, $10,000 just magically appeared in your account. Where did that come from Sir?

          Even if you have the deposit, withdrawing super is an automatic "No" for a house loan.

          Banks tightened up on loan applications a bit, and it's not a good look when in the future the borrower can't make repayments. "You shoudda knew we wuz skint, we spent our super! Not our fault to gave us the dosh!"

          @OP car buying habits don't help him much.

          (I work for a bank, even the First Home super thing everyone seems to have forgotten about is looked down on.)

          • @D C: Aren't you just assuming that the bank that OP withdrew his super is the same as the loan provider?
            That's not necessarily the case!

            • @PissLUR:

              That's not necessarily the case!

              But what about but what about but what about… sigh.

              If you have the deposit and a stable income, and pulled 20k out of your super into another account so you could blow it on the pokies then you'll probably be fine.

              If you tell the bank you have $100k, but only $80k with them and $20k in another account… uh-huh.

        • Mate you shouldn't comment on things you obviously have 0 idea on. Get some life experience first

  • Aren't there certain situations where you could claim and still get a loan? If you earn a decent income and can service a loan with 20% decrease in wage or what If you work 2 jobs and 1 isn't impacted?

    • +1

      1 isn't impacted?

      Yet. Have ya noticed this recession thing happening?

      The specific point is if you withdraw super you are saying "jeez, I could really use a bit of extra cash about now".

      • @DC - You could use the extra cash and put it to good use?

        • put it to good use?

          Like what?

          The early super release was only for those suffering severe financial hardship. You ain't gunna give those folk a home loan.

          If you pulled super out and then applied for a loan, don't complain about the answer being no.

  • Really curious to see OP's outcome.

    I'm in the same situation. Looking to buy a property and have taken out money from super. I'm a casual teacher so I've been affected for around 5 weeks. Work has resumed and it's been back to normal in Term 2.

    I'm waiting till the end of the year to start looking for a property to buy with a 180k deposit and approx 400k loan. This is so that the banks can see I've been getting consistent income despite the Covid situation (hopefully my pay doesn't get affected)

    Let us know if you do intend to apply for a home loan.

    • Let me how you go with your application
      If you apply before me. I’ll wait couple more months, house prices in my area are slowly going down.

  • I don't think there is any impact. Did you have to declare to the loan provider that you did an early super release? Doubt there will be this question in the process.

    • They did ask me if I was affected by covid in any way, but I'm not sure if they had a way to verify my answer…my payslips are completely normal.

  • How will the banks know that you’ve pulled $10k out of Super though? Is it through bank statements or is the ATO releasing information to them?

    • How will the banks know

      Because you have to explain where the $10k came from. Not that "The Super Duper Fund" as the depositor name won't give it away.

      • +1

        Your explanation isn't bound by a stat dec, so just lie and say you disposed of some Bitcoin you've been saving or sold your kidney.

    • Put down the bong dude

  • +2

    Don't listen to all the bullshit being spouted here by the people who read one article about some random person being declined a loan. I have family working in home loans at one of the big 4, and she said that as long as you can prove 5% genuine savings, then the bank doesn't care where the rest of the money came from as long as you can service the loan. After hearing this, I decided to apply after withdrawing my super and was given a pre-approval for more than the amount I need.

    • If you are using the super to make up the deposit, then you'll be declined.

      If you've got the deposit & and stable income, you didn't need the super in the first place.

      • Wrong, I used my super to get my deposit closer to the 20% threshold to reduce LMI. If you read my comment again, you'll notice that I've already been approved.

        • I've already been approved.

          Now you can buy a house for about $30k more than you were going to. Good job.

          Like I said, it's not really an issue if you already have the deposit & income, but it is a red flag.

          Anyway, unless you did that via the First Home Super things, you apparently don't bank where I work. Or my last job. Big red flags there.

          • @D C: It's not about increasing my borrowing power. It's about reducing my LMI and reducing my loan size all while slowly contributing the $10k + 15% back into my super this FY to take advantage of the tax loophole.

            Can't be a red flag when the bank doesn't know where the money came from. If they ask, I'll just tell them I disposed of some investments.

            Is it unethical? Yes
            Is it illegal? No

            • @DisabledUser193539:

              reducing my LMI

              That's not quite what the majority are doing. You would have gotten approved regardless.

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