First Home Buyers Savings Account

Saving for your first home can seem like you are taking on a trek up Mount Everest and even though the Australian Government is offering first home owner grants these incentives don’t cover all of the ground you need to make up when trying to meet a house deposit. Therefore, as well as the grants you will receive from the government when you buy or build your first home, you can also set up a first home buyers savings account which is designed specifically to help you save for your first home, while also offering government contributions and tax breaks on your savings.

Featured Savings Account

The UBank USaver is one of the newest and most revolutionary savings accounts. One of the highest rates on the market today, and backed by one of the Big Four banks so you know your money is secure. It is free to open an account.

• Maximum Rate: 5.51%
• Standard Variable Rate: 4.91%
• Bonus Rate: 0.60%
• Monthly Account Fees: $0
• Minimum Balance: $0
• Minimum Deposit: $0

Read the UBank USaver terms and conditions

Who is Eligible for a First Home Buyers Savings Account?

Of course you must have not already owned a home in Australia to be eligible to receive the benefits of a first home buyers savings account, but there are several other criteria too:

• You must be over 18 and under 65 years old.
• You must have a tax file number and this must be included in your application.
• You may not have owned a home in Australia or Norfolk Island which was your main residence.
• You cannot have previously opened a first home buyers savings account.
• You may transfer the funds from one first home saver account to another first home saver account.
• If the purchase or construction of your first home did not eventuate after you closed your first home saver account, you may open a new first home saver account within six months.
• There is a 14 day cooling off period in which you can close the account and still be eligible to open a new first home saver account.
• You may only open one first home buyers savings account.
• A first home saver account is an individual account, and cannot be opened in joint names.

Features and Benefits of a First Home Buyers Savings Account

A first home saver account is similar to a term deposit account in that you are required to leave your funds in the account for a certain length of time, and when the term ends, you must withdraw the entire amount and close the account.

Other features which can benefit first home buyers:

• Government contributions and interest earned are tax free and you don’t have to report them on your tax return; the earnings from your first home buyers savings account are still taxed at 15%, but this tax is paid by the account provider. Any government contributions and interest earned won’t affect any pensions you receive from Centrelink either.
• When you have held your first home buyers savings account for four financial years, you can withdraw the funds, tax free.
• You can make personal contributions at any time from your wages by setting up a regular transfer, or through bulk deposits from your tax refund or money from an inheritance.
• You could still be eligible for the first home owner grant, but you must apply for the grant in a separate application.
• Contributions can only be made to your first home saver account after tax, meaning you can’t salary sacrifice some of your wages into your account.
• Family members or friends can contribute funds to your first home buyers savings account too, to help you along.
• You have 14 day cooling off period which allows you to withdraw your personal contributions and close the account if you change your mind, while still being eligible to open a new first home saver account in the future.
• If you close the account outside of the 14 day cooling off period, savers over 60 years old will receive their funds back, while those under 60 will have the funds transferred to their nominated superannuation account.
• The Australian Government will contribute 17% on the first $5,000 you save each financial year, so you have the ability to earn an extra $850 a year in government contributions.
• The financial institution offering the account will also offer you a high interest rate, generally higher than their standard high interest savings account rates.

How to Apply for a First Home Saver Account

Not all financial institutions will offer a first home saver account, and not all high interest savings accounts can be used as a first home saver account, so make sure you are opening an account designated for first home buyers, to ensure you are eligible for the government contributions and tax incentives. Once you have compared the first home saver accounts on offer, choose one with a provider you are happy with, and one which offers the features you need and want, not all first home saver accounts are the same and some will have different fee structures and offer different interest rates.

To compare the high interest savings accounts which can be used as first home saver accounts, view the Savings Account Finder™ comparison tables here, and follow our secure links to find out more about each providers’ accounts and services.