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Chapter 10: Getting your superannuation

You may be able to get access to your superannuation early when you are behind on your home loan.

Conditions apply and there is no guarantee you will be successful.

Dos and don’ts

Dos

Don'ts

  • Don't rely on getting your superannuation to solve all your problems.
  • Don't access your superannuation when you need to sell your home anyway (see Chapter 8: Do I need to consider selling my home?).
  • Don't negotiate a repayment arrangement that depends on getting your superannuation (as it may not happen).
  • Don't think that the lender will not take legal action while you try to access your superannuation.

  • Don’t risk losing both your superannuation and your house

    Your superannuation is usually protected from bankruptcy – as long as it stays in your super fund. If you owe more in debts than your house is worth, there is a risk you may end up bankrupt so you may lose both the house and any super you withdrew.

Generally you can withdraw three months worth of mortgage repayments and 12 months worth of interest.

You must pay tax on the amount you withdraw. This reduces the amount you can use to pay the mortgage.

The Australian Taxation Office (ATO) will consider your application to release superannuation early on compassionate grounds. You need a myGov account.

Accessing your super

  1. Ask your superannuation fund if they will release your superannuation on compassionate grounds if approved by the ATO.
  2. You will need a letter from your lender on its letterhead to upload to the ATO. It must be dated and less than 30 days old when you submit it. It should say the following:
    1. there is an overdue amount
    2. the lender will sell your home if you do not pay it
    3. the address of the home
    4. the total amount for 3 months of loan repayments
    5. the total amount for the next 12 months of loan interest
    6. the name of the lender
    7. the account number of the loan.

Submit your application to the ATO with supporting documentation using the myGov website. If the ATO approves the release, you will need to send the original ATO letter to your superannuation fund. Your own superannuation fund may have other requirements such as filling out a separate form and identification verification

  • Taxable withdrawal

    You must pay tax on any amount you withdraw.

Some problems may occur when trying to access your superannuation:

  • the lender will not agree (they can refuse if they are concerned you won’t be able to afford the mortgage even after you get your super)
  • ATO will not approve the release
  • ATO delays in processing your application
  • lender delays in giving the required information and confirmation
  • a delay could mean that the amount released is not enough to cover your arrears (overdue payments).

  • Avoiding problems accessing your super

    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 lender commencing action for possession of your property. There are other grounds that may apply, for example:

  • you have been on certain Centrelink payments nonstop for over 6 months, or
  • you have medical reasons such as illness or to care forsomeone who is ill.

For a full list and further details, see ATO: When you can access your super early.

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