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Mortgage stress handbook

10. Getting my superannuation

You may be able get access to your superannuation when you are behind on your home loan. Certain conditions apply and there is no guarantee you will be successful in your application to get access to your superannuation.

Dos and Don’ts

DO
  • Negotiate a financial hardship arrangement with your lender or through a dispute resolution scheme (see Chapters 6 and 7)
  • Get advice on whether accessing your superannuation is likely to help
DON’T
  • Rely on getting your superannuation to solve all your problems
  • Access your superannuation when you need to sell your home anyway (see Chapter 8)
  • Negotiate a repayment arrangement that depends on getting your superannuation (as it may not happen)
  • Think that the lender will not proceed with legal action because you are accessing your superannuation
Exclamation
Your superannuation is usually protected from bankruptcy until it has been withdrawn from your super fund. If you owe more in debts than your house is worth, you should think seriously about leaving your superannuation in your superannuation fund so that it will be protected in the event that your house is sold for a significant shortfall and you end up bankrupt.

The amount you can withdraw is generally limited to the amount equal to 3 months repayments and 12 months interest.

You also need to pay tax on any amount you withdraw, reducing the amount available to pay the mortgage.

Accessing your super

  1. Get an application form to access your superannuation from the Centrelink website and search for early release of superannuation.
  2. Complete the application form.
  3. Contact your lender to get them to confirm the following in writing to the Department of Human Services (DHS):
  1. That the lender “will exercise power of sale” over the mortgaged property or “will foreclose”, unless the arrears amount is paid by a given date.
  2. The address of the property in arrears.
  3. The amount of the arrears owing.
  4. The amount that is equal to 3 months of repayments under the mortgage.
  5. The amount that is equal to 12 months interest on the outstanding balance of the mortgage, at the time the document was prepared.
  6. The name of the lender and the account number.
  7. That the lender will not exercise their power of sale if the arrears are paid by a given date.

You will need to pay tax on any amount you withdraw, reducing the amount available to pay the mortgage.

Some problems that may occur when trying to access your superannuation:

  • The lender will not agree
  • The lender agrees not to exercise its power of sale by a certain date but your superannuation is not released by that date
  • DHS will not approve the release
  • There is a delay in DHS processing your application
  • There is a delay by the lender in giving the required information and confirmation
  • A delay means that the amount released is not enough to cover your arrears

Remember Remember

The best way to avoid problems with getting your superannuation is to make a hardship arrangement that does not depend on successfully accessing your superannuation.
This chapter has explained the basis for accessing your superannuation in order to prevent your home being repossessed. There are other grounds that may apply, for example:
  • You have been receiving Centrelink payments for over 6 months; and/or
  • You have medical grounds for accessing your superannuation including illness or to care for someone who is ill.

See www.humanservices.gov.au and search for early release of superannuation.