Accessing superannuation - Mortgage stress
Possible problems in getting your superannuation
Problems that may occur when you try to access your superannuation include:
- The lender may not agree to giving you time to access it.
- The lender agrees not to exercise its power of sale by a certain date, but your application to release your superannuation is refused, or not approved in time.
- There is a delay by the lender in giving the required information and confirmation to your super fund, which means the amount eventually released is not enough to now cover your arrears (because your interest debt is still growing).
More things to think about before accessing your superannuation
The amount you can withdraw from your superannuation is limited and varies depending on whether your application is based on severe financial hardship or on compassionate grounds.
You may need to pay tax on any amount you withdraw, which reduces the final amount you will end up with to put towards your mortgage.
If your total debts are greater than what your house is worth, you should think seriously about leaving your superannuation in its super fund. If you are forced to sell your house and do not have enough money to cover your debts, you could end up bankrupt. While your superannuation is in a super fund, it is usually protected from bankruptcy. If it has been withdrawn from your super fund, it loses that protection. More information on bankruptcy is available from the Australian Financial Security Authority.
How to apply to access your superannuation
You should discuss this option with a financial counsellor before taking any steps to access your superannuation.
The best way to avoid problems with accessing your superannuation is to negotiate a hardship variation with your lender (including through the Australian Financial Complaints Authority (AFCA)) that does not rely on being able to access your superannuation.
To access your superannuation
- Read the information on getting early access to your super from the Australian Taxation Office website, which also covers how early release payments are taxed.
- Applications for access on compassionate grounds are made directly to the ATO, and can be done online. You will need to include a letter from your lender that provides supporting evidence for your application.
- If you are applying on the basis of severe financial hardship, you will need to contact your superannuation fund to ask about how to apply for money to be released.
Checklist before accessing superannuation
✓✓ Negotiate a financial hardship variation with your lender or AFCA.
✓✓ Get advice on whether accessing your superannuation is a good idea in your situation.
✗✗ Rely on getting your superannuation to solve all your problems.
✗✗ Access your superannuation if you will probably need to sell your home anyway.
✗✗ Negotiate a hardship variation that depends on getting your superannuation (as it may not happen).
✗✗ Think the lender will not proceed with legal action simply because you trying to access your superannuation.