07.Step by step guide
Are you eligible?
You must never have owned a home, be aged between 18 and 65 and have a tax file number.
Can you wait four (financial) years?
If you think you might be ready to buy your first home sooner, then don’t open a FHSA. You won’t be able to withdraw money from the account for your deposit or mortgage repayments; the balance of your account will divert to your super fund.
Will the FHSA give you a tax advantage?
For many people, 15% is less than the tax rate they’d pay on a regular savings account (which is taxed at your income tax rate). However, if you don’t pay tax, you could be better off leaving your money in a regular high interest savings account for now, and opening an FHSA just before the end of the financial year, in time to get the government’s 17% contribution.
Decide between a deposit or investment-style account
Assuming investment fund FHSAs come on to the market, consider the pros and cons of each. Essentially, a deposit account is safe but may not provide as high returns. The value of an investment-style account may fluctuate (just look at what’s happened with super funds over the last 12 months), but could provide higher returns over the medium to long term (five years and longer).
Compare providers and offers
The comparison table lists most of the accounts available October 1. Remember to check Product Disclosure Statements for fees, interest rates and conditions. Even deposit accounts that have no account fee or switching fee may have other costs, such as direct debit dishonour penalties, for example.
Monitor the market
Interest rates and fees can change, so you can switch to another FHSA provider if your account becomes uncompetitive. Check if an exit fee will apply. It’s also worth keeping an eye on the maximum government contribution, which will be indexed and can increase from $850 per year over time. The maximum account balance (currently $75,000) will also be indexed.