The Australian dream of owning a home has become increasingly elusive for many, particularly as the housing market soars and the cost of living bites harder into our budgets.

However, a radical proposal from Liberal Senator Andrew Bragg could change the game for countless Australians struggling with mortgage repayments.

The suggestion? Allow Aussies to withdraw their entire superannuation balance to pay off their mortgage.

This bold idea is a response to the current housing affordability crisis and the rising cost of living, which is leaving many Australians feeling the pinch.

The Coalition had previously campaigned to allow first-time homebuyers to withdraw up to $50,000 from their super for a mortgage deposit.

However, Senator Bragg is pushing the envelope further, proposing that Australians be allowed to use their entire super balance to achieve the dream of home ownership sooner.

Senator Bragg proposes using superannuation to pay off mortgages. Credit: Shutterstock

The proposal comes as the average borrower has been shelling out an additional $19,000 annually on their mortgage since the Labor government took office in May 2022.

‘There are many Australians who have a decent-sized super balance that they would like to offset on their mortgage which would reduce their interest payments and get them closer to home ownership,’ Senator Bragg explained.

‘There's a range of ways this could be achieved from full withdrawal through to being held in a legislated offset account.’

‘One of the things that worries me is you've got people forced to pay high fees to their super fund and simultaneously pay high interest to a bank.'

Those in arrears or default have limited options, as current severe hardship rules restrict immediate access to superannuation funds.

Senator Bragg, the Opposition's home ownership spokesman, believes that the key to a successful retirement is not necessarily the size of one's superannuation balance but instead their home ownership status.

‘It's a highly rigid system. I just don't buy this idea that we have to force everyone into a straitjacket,’ he continued.

‘If the Bank of Mum and Dad is now going to be determining housing outcomes, we're in very dangerous territory.’

‘Increasingly, we're seeing housing outcomes dictated by parental wealth, and that's very bad. I'd say that's very un-Australian.’

‘Where super comes in, absent the Bank of Mum and Dad, this is likely to be people's biggest source of capital.'

He cited the example of a homeowner in their 40s with an average mortgage of $600,000, suggesting that using $200,000 from super to offset the loan could significantly reduce interest payments and fast-track the journey to outright home ownership.

The Senate Economics Committee is currently exploring this idea, with a report from the 'Improving consumer experiences, choice, and outcomes in Australia’s retirement system' inquiry expected soon.

An interim report has already floated the concept of a mortgage offset account linked to super, allowing borrowers to use their retirement savings for monthly repayments, thereby preserving their bank savings.

While the idea may seem attractive, especially to those feeling the squeeze of high mortgage repayments, it has its critics.

Labour has opposed early super access, arguing that it could deplete retirement savings and increase elderly dependence on the age pension.

The Reserve Bank's series of interest rate rises have only added to the urgency of finding a solution, with monthly mortgage repayments on an average of $600,000 loan jumping by 68 per cent.

The debate is set against the backdrop of a growing superannuation sector valued at $3.5 trillion, which the current government argues is essential for ensuring a dignified retirement.

Treasurer Jim Chalmers has expressed concerns that early access to super could harm long-term retirement savings.

‘The last decade saw the former government raid the superannuation system for its own purposes with a devastating impact on the savings of millions of Australians,' he said.

'Legislating an objective of super will help prevent this happening again.'

Senator Bragg, however, counters that the Labor government's ties to union-dominated industry super funds may be influencing their stance against exploring early super access.

'Labor doesn't care about the workers. What they care about are the donations they receive from unions and the super funds,' he replied.

‘The idea that super makes a massive difference to pension is false,’

‘For younger people who want individual agency, this is a practical policy,’

‘It's also a policy that helps protect the Budget over the longer term.’

In related news, a woman explained how Australians can receive a government contribution of up to $500 for their superannuation by making a personal after-tax contribution of $1,000.

The Super Co-contribution Scheme provides 50 cents for every dollar contributed, up to a maximum of $500, specifically for low—and middle-income earners. More information is available here.

Key Takeaways

• Liberal Senator Andrew Bragg suggests Australians should be allowed to withdraw their entire superannuation balance to help pay off their mortgages.
• The proposal comes as the opposition considers making this an election issue amidst rising mortgage costs and the cost-of-living crisis.
• A Senate economics committee is exploring the idea, and an inquiry report is expected soon. Discussions include allowing mortgage offset accounts linked to super funds.
• Labor opposes the early withdrawal of superannuation, arguing it would deplete retirement savings and increase dependency on the age pension.

What do you think about using your super to pay off your mortgage? Is home ownership the ultimate retirement security, or should super be preserved for later years? Share your thoughts and experiences in the comments below.

 

[havingadoggyday]

I think rain 72 that we have to agree to disagree gracefully .Whilst the idea of all the restrictions placed and promises to pay back etc all sound very good on paper,could all of this be monitored correctly,hell they can't even get their pensions correct and hit people with bills years later.I for one am not confident.Also what we have totally not discussed,as other things were more urgent,is the fairness monetarily here.For super to work properly, there has to be enough people in THE BUCKET to start off with.If you start to allow rules for some then what about the others,you can't differentiate.It IS EVERYBODY'S
MONEY,but if people start taking out money left right and centre, even under all restrictions you mention,what happens to the super of all those that haven't touched it?
Less money for super funds to invests, more loses for those that have not touched theirs and there are crashes.Then those that have not touched theirs and waited patiently for a decent pension free retirement,are penalised and their balance in their funds that they have been accruing for decades is worth nothing.
PLUS.We can't discriminate between groups.Why can you let people take out money for a house but not for a lot of people that need it for other reasons that is equally sad or needing?Is it a free for all, or just for houses and why????
I only see chaos here.
Leave super for what it was meant for, retirement.Thankyou.I have said and end my piece.God bless

 

[Towing]

Some people, including young people don't think about saving for a house when they start work, they put as much as they can into superannuation, then they don't have enough in ready cash for a house deposit.
Besides if you earn interest on it in a bank you pay tax on the interest. You have already paid tax on the money when you earn it. Govt. double dips - actually triple dips if you buy something that has GST charged.

 

[Rain72]

I think rain 72 that we have to agree to disagree gracefully .Whilst the idea of all the restrictions placed and promises to pay back etc all sound very good on paper,could all of this be monitored correctly,hell they can't even get their pensions correct and hit people with bills years later.I for one am not confident.Also what we have totally not discussed,as other things were more urgent,is the fairness monetarily here.For super to work properly, there has to be enough people in THE BUCKET to start off with.If you start to allow rules for some then what about the others,you can't differentiate.It IS EVERYBODY'S
MONEY,but if people start taking out money left right and centre, even under all restrictions you mention,what happens to the super of all those that haven't touched it?
Less money for super funds to invests, more loses for those that have not touched theirs and there are crashes.Then those that have not touched theirs and waited patiently for a decent pension free retirement,are penalised and their balance in their funds that they have been accruing for decades is worth nothing.
PLUS.We can't discriminate between groups.Why can you let people take out money for a house but not for a lot of people that need it for other reasons that is equally sad or needing?Is it a free for all, or just for houses and why????
I only see chaos here.
Leave super for what it was meant for, retirement.Thankyou.I have said and end my piece.God bless

If the system was genuinely intended to facilitate using super for retirement I might agree, but it isn't. People who save or put money into super are penalized - unless they are wealthy. Denial of pension and concessions leaves many who tried to self-fund their retirement worse off than those collecting pensions. And then there are those who gift generously to kids, buy expensive mansions, take world trips, gamble, party.... There is NOTHING to stop them manipulating to ensure their super runs down and they claim a pension, yet there IS a restriction that leaves them unable to save or accrue super because of huge rent costs and insecurity of accommodation. So let's make everyone poor, shall we? Continue denying them the best retirement security there is, but let them waste money any other way they please!

What, exactly, is ''fair'' about taking such a huge chunk of someone's earnings to put aside for decades while they can't afford a roof over the heads of their family. And then we condemn them to poverty in retirement because they weren't allowed to buy a house when they should have been able to. But I guess it's ''fair'' to force them to pay $1 million for a home when they are 65, after spending millions on rent for decades, while the more affluent can buy 3 or 4 homes and make monstrous profits both from rent and from hugely inflated sale costs selling to the paupers who were forbidden to access the money THEY EARNED when they needed it.

How is it ''fair'' to boost superannuation so SOME lucky people can enjoy higher returns at the expense of battlers who are deprived of a home? Frankly, I don't see anything fair in that.

Can we PLEASE stop this lie about super being some wonderful scheme to fund retirement? It's a tax haven for the rich. It does NOT fund retirement for battlers and it never will. For some, who are hopeless money managers but earn a decent wage, it will compensate somewhat for their incompetence. For the competent, it's not a benefit in any way shape or form and could well be a massive detriment. What's "fair" about depriving good money managers so the rich can save tax and the bad money managers can have their hands held?

AS for government or bureaucrats managing anything, I agree. But I don't think their incompetence should result in battlers being homeless and I don't see how further deprivation can help anyone. We have a housing crisis, yet we are denying people who should be able to comfortably afford a home the right to spend their own hard-earned money on the asset that will best secure their retirement, while claiming we are somehow facilitating financial independence in retirement through that deprivation.

Maybe the homelessness crisis needs to get 1000 times worse, and then people will wake up that it makes no sense to deny people who should be able to buy a home of their own, using the thoroughly fallacious and absurd claim that rendering them homeless now will somehow help them in their winter years (if they ever reach them!)

Bottom line: Anyone with a brain WILL use their super to buy a home if they can't accrue enough outside super to fund the purchase. It's just a question of whether they do it early and have plenty of time to top up their super to a healthy balance, or whether they do it late and retire poor. Personally, I think allowing the former is far more sensible. But then, I like helping people to be more prosperous.

 

[Rain72]

Some people, including young people don't think about saving for a house when they start work, they put as much as they can into superannuation, then they don't have enough in ready cash for a house deposit.
Besides if you earn interest on it in a bank you pay tax on the interest. You have already paid tax on the money when you earn it. Govt. double dips - actually triple dips if you buy something that has GST charged.

I think a lot are misled to believe that piling money into super yields huge benefits but are never told the truth about the importance of saving outside super for a home, further education, investment, future medical and dental needs, etc. I know my daughter was given terrible advice about super by a financial manager.
But you are right about the unfairness of taxing savings. Saving for a home is hard enough without that extra tax burden. In the USA, interest on your home mortgage is tax deductible. That would certainly ease pressure on young home buyers, especially when interest rates are high and rising.

 

[havingadoggyday]

I think a lot are misled to believe that piling money into super yields huge benefits but are never told the truth about the importance of saving outside super for a home, further education, investment, future medical and dental needs, etc. I know my daughter was given terrible advice about super by a financial manager.
But you are right about the unfairness of taxing savings. Saving for a home is hard enough without that extra tax burden. In the USA, interest on your home mortgage is tax deductible. That would certainly ease pressure on young home buyers, especially when interest rates are high and rising.

Yes a lot of things are different in the USA.but unlike here,they are not worried in the least about housing affordability.Why?If you can't pay your home repayments for whatever the issue,you just hand your keys over to the bank and walk away.NO RESPONSIBILITY and no cost to you or penalty..You don't do that here,you can't pay,you have a debt.Simpleyou signed for a mortgage agreement with a lender.,and if you simply can't afford it at all,you must sell your house and payback the bank.The way it should be...you are not leasing a home
AMERICA'S SYSTEM IS NOT WHAT ITS CRACKED UP TO BE.THEIR HEALTH CARE SYSTEM SUCKS ALSO.
Have met many an American on our travels
They can't believe that you can be on a dole indefinitely as long as you can prove you have applied for jobs but are unsuccessful here(jobs that are way over what you know you can do to ensure you keep said pension),get free Medicare,rental assistance,cheap medicines,free operations in a hospital,free dental plans, concessions left right and centre,all whilst contributing NOTHING AND PAYING NO TAXES.
They really shack their heads and say that "this is the lucky country"

 

[Rain72]

Well, it's now been announced that research shows that housing costs are going to ''blow up the retirement system, with more than 30% of retirees having to rent and vast numbers still paying off a mortgage in retirement.
What is the point of this nonsense ''superannuation is for retirement'' claim if the system is going to blow up because people can't afford a home?
The solution is obvious. Prioritize home ownership over saving in superannuation. Let people buy a home FIRST, then worry about saving for retirement. Because retirement is miserable for vast numbers of renters and for a lot of people still paying off mortgages. Owning a home is the best security there is in retirement and it's been repeatedly confirmed from conclusive evidence that those who own their home retire more comfortably and happily.

Saving super for retirement is going to destroy the retirement system. That's the latest official declaration.

 

[havingadoggyday]

Why

Well, it's now been announced that research shows that housing costs are going to ''blow up the retirement system, with more than 30% of retirees having to rent and vast numbers still paying off a mortgage in retirement.
What is the point of this nonsense ''superannuation is for retirement'' claim if the system is going to blow up because people can't afford a home?
The solution is obvious. Prioritize home ownership over saving in superannuation. Let people buy a home FIRST, then worry about saving for retirement. Because retirement is miserable for vast numbers of renters and for a lot of people still paying off mortgages. Owning a home is the best security there is in retirement and it's been repeatedly confirmed from conclusive evidence that those who own their home retire more comfortably and happily.

Saving super for retirement is going to destroy the retirement system. That's the latest official declaration.

are 30% of retirees paying rent.Most if people on this site have been working since they were 16.Were they all to have prioritised paying off their homes surely at 70 they should not be renting.Geez I was a stay at home mum with two little boys and a husband with a trade.Our home was paid off in 20 years which was the bank limits on home loans in the 60-70-80s.We were mortgage free when I was 40 and hubby was 45.What did all the baby boomers do with their money so that you say super is nonscdncr.It wasn't even introduced till 1980 if my hubby recalls signing up.By the time we are of retirement age(we were 55-60)not only was out mortgage paid off but we had also accumulated a lot of super,again not me I didn't work,so again I ask what has everyone complaining done with their money.
As to the accessing super for home deposit,again,if a couple has 200-400 thousand dollars in super at such a young ages eg 35 that means that they have both been on very good incomes no????)What have THEY done with their said incomes from the time they started working.I really doubt that couple's of today,at that rough age group allowing for studies etc,have 200-400k between them to give for a deposit.Anyway this is a worn out subject.If you allow someone to take out however little or lot of super for their home purchase then as said 5 posts ago,were do draw the line,others may need it for a car they can't afford so get to the two jobs they will need to pay for the mortgage,someone else will want it to visit a sick relative overseas,you can't discriminate,PLUS everyone takes money out of super,the funds themselves have less to invest,then the whole system goes belly up and the only ones paying the penalty will be those that did the right thing from day dot,and in their much looked forward to pension and concession card free retirement,will be screwed cos there won't be anything in there for the funds to invest.Dont forget that,its not alladin's lamp,the funds need our money in order to turn it into more money so that we can draw from it in retirement.I am done Thanks.

 

[Rain72]

Why

are 30% of retirees paying rent.Most if people on this site have been working since they were 16.Were they all to have prioritised paying off their homes surely at 70 they should not be renting.Geez I was a stay at home mum with two little boys and a husband with a trade.Our home was paid off in 20 years which was the bank limits on home loans in the 60-70-80s.We were mortgage free when I was 40 and hubby was 45.What did all the baby boomers do with their money so that you say super is nonscdncr.It wasn't even introduced till 1980 if my hubby recalls signing up.By the time we are of retirement age(we were 55-60)not only was out mortgage paid off but we had also accumulated a lot of super,again not me I didn't work,so again I ask what has everyone complaining done with their money.
As to the accessing super for home deposit,again,if a couple has 200-400 thousand dollars in super at such a young ages eg 35 that means that they have both been on very good incomes no????)What have THEY done with their said incomes from the time they started working.I really doubt that couple's of today,at that rough age group allowing for studies etc,have 200-400k between them to give for a deposit.Anyway this is a worn out subject.If you allow someone to take out however little or lot of super for their home purchase then as said 5 posts ago,were do draw the line,others may need it for a car they can't afford so get to the two jobs they will need to pay for the mortgage,someone else will want it to visit a sick relative overseas,you can't discriminate,PLUS everyone takes money out of super,the funds themselves have less to invest,then the whole system goes belly up and the only ones paying the penalty will be those that did the right thing from day dot,and in their much looked forward to pension and concession card free retirement,will be screwed cos there won't be anything in there for the funds to invest.Dont forget that,its not alladin's lamp,the funds need our money in order to turn it into more money so that we can draw from it in retirement.I am done Thanks.

The system IS going belly up, because of people not being able to afford a fully paid-off home to retire in. Good luck with the ''I'm okay and they should be'' attitude when that happens. When we discuss 30% renting and vast numbers still paying off a mortgage, we are generally referring to younger retirees who lost large amounts of their income to compulsory super. But as to the question of people did with their money - plenty had problems and costs you can't even contemplate but were very lucky to avoid. My daughter and her husband earn good money, but a child with a major disability and chronic illness caused them to suffer a massive financial hit. Others suffer a devastating accident or illness. Divorce leaves many nearly destitute, despite having enjoyed good earnings for years. Floods, fires and cyclones have wiped out many people's dream of home ownership. And then there are the victims of fraudster or shoddy builders who have suffered massive losses when trying to have a home constructed.
Allowing someone to take out money for a home deposite would be an acknowledgment that a home is more valuable in retirement than super - and that is an undeniable fact. There is no reason to suggest people should also be able to draw out for cars, overseas travel, or other non-essentials - the sacrificing of which does not compromise the quality of life in retirement. We are talking about enhancing retirement. Nothing else.

A home or one's own enhances retirement more effectively than superannuation. That is a well-evidenced fact. It's also an undeniable fact that the earlier someone is able to place a deposit on a home, the less that home costs and therefore the more that person can ultimately contribute to superannuation and save or invest privately to fund retirement. So it follows that if we want people to be more independent and financially secure in retirement, we MUST give them every opportunity to buy a home as early in their working life as possible.

30% are renting NOW. A large percentage are paying off a mortgage in retirement NOW. Wait 10 years or 20 years and see how much worse that problem becomes and what impact that has on the superannuation system, which will fail in its objective of reducing government costs to fund retirement because of the number of non-homeowners.