Apply for early release of superannuation to pay mortgage arrears or council rates

If your financial hardship is temporary, you have the option to apply to access some of your super early to pay your mortgage or council rates arrears and prevent the forced sale of your home.

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COVID-19 Changes: The COVID-19 early access to your super closed on 31 December 2020.  Read about what evidence you may need to prove you were eligible and what you can do if you obtained early release of your super when you may not have been eligible if you are contacted by the Australian Tax Office here.

Applying to pay mortgage arrears or council rates

If your lender or council is threatening to sell your home, you may be eligible to access some of your super early on compassionate grounds so you don’t lose your home. The super can be used to make payments to your home loan or to pay council rate arrears.

Any super you withdraw for this purpose will be taxed and the tax amount will be deducted from the lump sum.  The tax rate varies depending on your age and other factors.  On average tax of approximately 22% will be deducted from your lump sum super withdrawal.

It is tempting to view early access to super as a quick fix for mortgage arrears but remember that you are using your future retirement income on an asset that you may lose if your financial hardship is not temporary, and you cannot return to meeting your normal repayments. This would mean you would be worse off in the longer term.

Remember, when you are behind on your mortgage or council rates, you need an agreed repayment arrangement in place while you apply to access your super. Otherwise, there’s a risk that your lender might start legal proceedings to sell your property while you’re waiting for approval.

Note:  If the amount needed to stop the forced sale of your home is more than what you have in your super then you will need to consider other options. 

 Note: Your superannuation fund is not obliged to release your funds early if their policy does not allow early access. If your fund does allow early access, you need to apply to the ATO.

Before applying call 1800 007 007 and speak to one of our financial counsellors about your situation, the risks associated with accessing your super early and all the options available to you.

 

Eligibility

If you want to access your superannuation to pay your mortgage arrears or rates you need to meet the following eligibility criteria:

  1. The lender or council is threatening to sell your home (your principal place of residence)
  2. You’re responsible for the loan repayments or rates because you own the home
  3. You can’t afford to pay the arrears without accessing your superannuation.

 

How to apply

Before applying, contact your super fund and check that they will release your super on compassionate grounds if your application is approved by the ATO.  Your superannuation fund is not obliged to release your funds early if their policy does not allow early access.  If you are in this situation, call 1800 007 007 and speak to one of our financial counsellors.

If you’re eligible, you can apply online using the ATO online form accessed from your MyGov account.

Superannuation for your mortgage

If you’re applying for early access to your super to help with your mortgage, you’ll need a copy of any default notices as well as a letter from your lender that confirms:

  • if the arrears aren’t paid within a specified time frame, the mortgagee will foreclose the mortgage and take possession of, or sell, the property
  • the amount owing that must be paid to stop the action to sell or take possession of your property
  • the address of the property under threat of sale
  • the amount equal to 3 months of repayments for the loan
  • the amount equal to 12 months interest on the outstanding balance of the loan, and
  • the name of the mortgagee and the bank account number for the loan

Superannuation for your council rates

For your council rates, you’ll need a letter from your council confirming:

  • the amount of the arrears and the length of time the rates have been in arrears
  • the council will sell the home if the arrears aren’t paid within a specified time frame
  • the address of the home under threat of sale
  • the relevant state or territory legislation the action’s being taken under, and
  • the arrears will be accepted to stop the forced sale

You can find more information about eligibility, evidence required and how to apply for early access on compassionate grounds on the ATO website.

 

Speak to one of our financial counsellors

If you’re feeling overwhelmed and need some help to deal with your financial hardship, you can speak with one of our financial counsellors.

Financial counsellors aren’t judgmental about your circumstances – they’re here to offer you free, confidential and independent advice and assistance.

To speak to a financial counsellor you can:

  • Call the National Debt Helpline on 1800 007 007 – open Weekdays from 9:30 am to 4:30 pm.
  • Use our live chat service by clicking the chat icon in the bottom right corner of your screen. Live chat is available 9:30am-4:30 pm weekdays. If you send a message outside these hours a financial counsellor will get back to you.
  • Make an appointment to see a financial counsellor in your local area – Find a local Financial Counsellor .

How much of my super can I access?

For my mortgage

The maximum amount of super you can get in a 12-month period is:

  • 3 months repayments; and
  • 12 months interest on the outstanding balance of the loan.

For council rates

For council rates, you can only access the amount of the arrears.