Home Saver Account issues - help??

[racht_]

Hi everyone,

I'm new to the forum but I know a couple of people who are on here. I was just wondering if anyone could help me out with a question.

I'm a first home buyer and have been saving for a deposit for a few years now. All my money has been put in a first home saver account. I've just put down a small deposit for an off the plan unit which will be built in two years but they need the deposit now which is obviously fine with me.

However in trying to get my money out of the first home saver account they have told me that I cannot access this until the property settles in two years but I still need to pay the deposit in the next three weeks. So I've got myself in a little bit of a pickle.

Has anyone been in this situation and know how to work around this? Any advice would be greatly appreciated

Rachel

 

[see_change]

Rachel

Welcome to the forum .

Things to look at would be a deposit bond , or some type of bank guarantee over the FHSA . Not sure if there are restrictions on whether you can have that on a FHSA .

Maybe one of the brokers will be able to give their thoughts

I'd also talk to the developer and see if they have any suggestions

Cliff

 

[Jake Milne]

Yep, get a deposit bond, they're $500 but they expire

 

[Rolf Latham]

Hi

Welcome to the forum

My Guess is that a DP will not be available under the circumstances, unless the LVR is well under 80 % and is "equity" based rather than loan approval based

Even if you have 2 year out conditional approval ?? , its worth very very little in real terms since markets and employment conditions can shift.

My guess is that the FHSA could be used as the deposit ( instead of a bond).

Youd be best served to seek out some specific advice from your solicitor that can provide advice to your specific circumstances, there are LOTS of chinks to address in such a transaction.

http://www.firsthomesaver.com.au/ is one resource that looks like an interesting start.

ta
rolf

 

[see_change]

One thought would be, can you negotiate a lower deposit with the developer ?

Has anyone had any luck with doing this ?

Not sure what the situation is in other states , but in NSW , as a first home owner you'd be eligible for the stamp duty exemption and I think there is still a first home owners grant ( is this correct ? ) . If the developer is aware of this and if ( do you ? ) have current pre approval for a loan , the developer might look favourably on this .

Cliff

 

[Rolf Latham]

Also, the FHSA is probably NOT a suitable product to get a bank guarantee against, which is another option for those with say term deposits
ta
rolf

 

[Rolf Latham]

One thought would be, can you negotiate a lower deposit with the developer ?

Has anyone had any luck with doing this ?

Cliff

A lot would depend on the Developers funding rules

Most larger scale projects demand a 10 % deposit on pre sales, and many wont accept DPs either

Another way, is to usea bank guarantee against a relos assets. Something I frown upon, unless that relo asset is an investment

ta

rolf

 

[Peter_Tersteeg]

Hi Rachel,

As others have indicated, a deposit bond is a reasonable way out of this problem, but I think Jake has been a little conservative of his estimate in the cost for a long term bond (short term perhaps, but the longer term bonds are more expensive).

You haven't provided any parameters around how much you need the bond to cover, but we usually use Deposit Power and their website has a quick quote page which can be found here:

https://www.depositpower.com.au/publics/guaranteeQuote.aspx

You generally need to have a loan approved, or at least a pre-approval for the purchase in order to qualify for the deposit bond.

 

[tobe]

Your lookin at this the wrong way. You should be trying to extricate yourself from the OTP contract rather than trying to find them the money.

Regarding the money, there arent any easy answers. At most the developer might giv eyou more time to find it, but you will need to stump up 10%, in cash.

 

[see_change]

Your lookin at this the wrong way. You should be trying to extricate yourself from the OTP contract rather than trying to find them the money.

Regarding the money, there arent any easy answers. At most the developer might giv eyou more time to find it, but you will need to stump up 10%, in cash.

Why ?

Some people seem to have an almost pathological dislike to OTP's

Without knowing the specifics of the deal , it's wrong to make sweeping statements like that .

If its in sydney , in a good area , then it might be a good time to be buying OTP.

Cliff

 

[Kirsti]

Hi Rachel,

Can I ask which bank the account is with?

I work for a Credit Union that offers FHSA's and I have read the legislation a few times (but not recently so a little fuzzy). My understanding is that if you have met the four year rule you can withdraw funds for a deposit or progress payments on construction regardless of how far away settlement is. The criteria is then that you have to move into the home for six months within 12 months of completion of the property. If the purchase does not proceed or you don't end up living in it you are required to return the money to the account or pay a fine.
I find that these accounts are pretty confusing for your average teller and I would recommend asking someone higher up to check the legislation. If you want to read it yourself go to http://www.comlaw.gov.au/Series/C2008A00044

So the question then becomes, have you deposited at least $1000 in each of four separate financial years?


To clarify a different point above, the FHSA cannot be used as effective security for a guarantee or personal loan. The FHSA funds need to go to purchase costs or a qualifying mortgage and the bank cannot use them to extinguish other debt.

 

[racht_]

Hi everyone
Thank you for your help. That's right, I looked into a deposit bond and they wouldn't accept this but they would accept a bank guarantee as my last option.

Because the building isn't due for completion until 2015 most banks won't do a pre-approval that far in advance.

My home saver account is with commonwealth bank. I've had this for over four years and have saved $1,000 in at least in four years. The lady in the bank that I spoke to seemed to be quite knowledgable in that she had said previous clients had come across the same issue but it might be worth asking at a different branch to double check. Her main point was that I couldn't use the money in the account until it settles and I have a loan.

Kirsti - from memory do you ever remember a situation where someone has been able to access funds going into an OTP contract with this account?

 

[Meisterin]

I have FHSA with ME bank and they have told me that I can use it for a deposit on a house. Provided that I have fulfilled the 4 year criteria, all I have to do is to fill out a form and they will transfer the money into my account. The condition is that I must put down as a deposit on a house within 6 months or return the money to a new FHSA if my purchase falls through.

I also read some links in ATO a couple of days ago and in the examples given FHSA savings could be used as deposit.

Let me try to find the link for you and I'll post again later.

 

[Meisterin]

Here is the link from Ato

http://www.ato.gov.au/Individuals/F...lding-or-buying/?anchor=P425_29521#P425_29521