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.

 

[Rain72]

That was I reckon the main reason for the start of Superannuation, you funded your own Retirement

And you CANNOT fund your own retirement if you have to pay rent. A home is the FIRST necessity for a comfortable retirement.

 

[Rain72]

All the people saying here they purchased a long time ago and now can live on the pension are missing the simple fact that houses are many multiple more expensive than they were before. Sure if you bought your home in the 70s 80s you could have paid it off by now and possibly saved for retirement at the same time through Super. This policy from the LNP is completely lacking in sense for the economy as a whole .Firstly allowing people to draw on their super would put a rocket ship under prices the whole property market more inequitable and basically leading to more of the same, people not getting into houses. Secondly having money drawn from Super balances where at present it is typically invested in Balanced funds that invest across many Investment classes and funnelling the money in to property would further the already ridiculous over investment in property in this country to the detriment of industry and the economy as a whole. Lastly the main reason that the LNP want to do this is cynical and political, to undermine the influence of Industry Super funds not because the policy makes any economic sense. Australia has the most expensive property prices per capita in the world. All this would do would be to make that worse.

And the reason Labor DOESN'T want to do it is they want people poor and renting. For heaven's sake, think about the cost of rent. A couple pays millions in rent over a lifetime, then when they can FINALLY draw on their super to buy a house, it's six to 10 times more expensive than if they had bought it earlier, so there goes their super! Or they keep renting and stay dirt poor in retirement no matter how much super they have, and they drain their super to cover high living costs because of rent, then go on the pension - still poor!
I believe there needs to be tight controls. Only let those who genuinely cannot afford a house without accessing super and only allow a basic home. But a home is far better security in retirement than a high super balance and it makes perfect sense to allow people to prioritise a home over super savings. Once they have a home, their accommodation costs fall gradually, allowing them to put more into super. It could even be made a loan from super that has to be repaid if the person has reasonable capacity to repay it over time.

 

[Rain72]

Will the pension still be available. I believed super was to replace the pension.
What do people want..... for their employers to pay for their homes and the gov to pay for their old age.
Life isn't easy but you just need to prioritise.

Priotitize? That's exactly what compulsory super STOPS people doing. They need and want to prioritize a home, but instead they are forced to throw bucketloads of money at a retirement plan that makes no sense when you have to pay out millions in rent. Let people buy a home FIRST, as my generation did, and THEN worry about retirement when you have a secure roof over your head and accommodation costs are falling because you have paid a big chunk off the mortgage. Otherwise, they pay millions in rent and yes, have a fat super balance that either has to be spent on high rent in retirement, keeping them poor, or used to buy a home at 6 to 10 times the price they would have paid for it if allowed to prioritize.
No, the employer is NOT paying for their home. Super was introduced in lieu of pay rises and tax cuts. It's the employee's money. And they SHOULD be able to use it in the wisest way for them. And there will be far higher cost to government for pensions for retirees if people can't buy themselves a home. Their super will disappear quickly either buying a very expensive home in later life, or paying rent in retirement - after having wasted millions on rent while working just so they can keep a higher super balance that is NOT a benefit.
i am self-funded in retirement. If I had to pay rent, I would have eaten thru my super and savings by now and be on a pension. I am self-funded BECAUSE I was able to prioritize paying off a home over saving for retirement, and delay retirement saving until AFTER I had secured my home.

 

[MCR]

More rational policies would be about making housing more affordable by reducing the proportion or number that are held by investors NOT by pouring gasoline on the market with more funding from a new source. If the cost of housing weren't so high ( in part caused by the holding of multiple properties by investors) the renters could buy at the margin, replacing investors with renters who buy for the available housing stock.

 

[Rain72]

More rational policies would be about making housing more affordable by reducing the proportion or number that are held by investors NOT by pouring gasoline on the market with more funding from a new source. If the cost of housing weren't so high ( in part caused by the holding of multiple properties by investors) the renters could buy at the margin, replacing investors with renters who buy for the available housing stock.

There's some validity in that, but interfering with the free market is always a disaster. There is a shortage of rental accommodation already. Stopping investment is likely to increase that shortage, not necessarily enabling all those unhoused renters to buy. Property investors are hated, but they provide a valuable service to the community and we need them to invest. We also do not want to crash property prices as that would be a complete disaster for anyone with a substantial portion of their asset mortgaged.
I agree we don't want to increase the demand for properties if we can avoid it, which is why access to super should be tightly restricted to only those who absolutely need it, only for basic housing, and only the portion they actually need to secure a decent home. There may be other precautions that can be taken to keep a lid on prices, such as limiting the purchase to a newly-built home in selected estates.

 

[toda67]

Australia hasn't invested in new houses to the quantity and quality that is required. Homeowners who already had equity in their own homes don't want the different types of housing such as duplexes, units, high- rise and tiny houses in their area because of lowering the value of their home, creating problems with access to views, changing the culture of the neighbourhood or cause increased congestion without the appropriate infrastructure. We are a culture who sees the value of home ownership but there are examples of cultures like Europe where there are satellite cities that have grown from necessity and that renting and the laws around renting allows tenants to have security of tenancy. We are a country where we predominantly live on the green coastal fringes or sprawling capital cities and that has it's own problems. Of course, there will be differing views, but we all believe it's a basic human right to have a home. But humans can be co-operative and innovative.

 

[Rain72]

We could increase investment in new homes if we had proper regulation of builders and building trades. Check out the FB page ''Exposing Dodgy Builders''. It's disgusting how many people trying to get a home built are destroyed by dishonest and shoddy builders and tradespeople, and regulators do NOTHING. They are totally corrupt. We need this problem sorted urgently, because it's reducing the number of new homes being constructed.
We also need to reduce the absurd building codes applicable in some areas. It is patently stupid to require a young couple starting a family to build a home suited for wheelchair access throughout! Build costs have risen around 30% recently because of silly regulations.

 

[novezar]

Too many long faluted answers to read them all. Good luck to whom ever.

 

[Darrell-R-Jordan]

I worked multiple jobs and long hard hours to get my home deposit on a single income in the 1970's. Continued to work a full time job and multiple part time jobs for 15 more years. I learnt that while you are busy, you are not spending and wasting money. I lived minimalistically. Learning that for saving, every drop eventually filled the bucket. I chose cheapest accommodation I could find, living close to squalor at times. With the end game of home ownership on sight, it was a necessary sacrifice. I don't see that happening anymore. We must never use superannuation to pay for housing. It will send house prices through the roof. We need a correction of house prices. Using superannuation will also crash the share market.

 

[Rain72]

I worked multiple jobs and long hard hours to get my home deposit on a single income in the 1970's. Continued to work a full time job and multiple part time jobs for 15 more years. I learnt that while you are busy, you are not spending and wasting money. I lived minimalistically. Learning that for saving, every drop eventually filled the bucket. I chose cheapest accommodation I could find, living close to squalor at times. With the end game of home ownership on sight, it was a necessary sacrifice. I don't see that happening anymore. We must never use superannuation to pay for housing. It will send house prices through the roof. We need a correction of house prices. Using superannuation will also crash the share market.

 

[Rain72]

People should not have to live ''close to 'squalor'' to buy a home, and it isn't healthy for a parent to work and live as you say you did while raising children. Superannuation only existed in the 70s for people in selected occupations. Yet folk who never enjoyed the benefit of super managed to retire owning a home and quite able to enjoy a comfortable retirement. Compulsory super was created by workers sacrificing wages and tax cuts, so it is not reasonable to suggest that they should not be able to access that sacrificed money to buy a home. Isn't it odd that now that this ''wonderful'' compulsory super exists, people can't afford a home anymore and they are NOT retiring comfortably? Something is very wrong. Super has NOT delivered the benefits it promised, and maybe that's because the system has the priorities all wrong.

People need a home FIRST. Then retirement savings. And there is no reason to suppose letting them have that would crash the market if proper controls were implemented. But while you say it will, you then say a correction should happen. Well, NO A correction would destroy millions of lives, leaving people with debts higher than the value of their home.
We need some sensible monetary policy that recognizes that a home is the FIRST necessity for retirement comfort, and allows those who have no other way of attaining it to access only a sufficient amount of their super to put a healthy deposit on the most modest home available in the area in which they need to live. And make it a loan in most circumstances - with repayments to commence after, say, ten years or during any period when the repayments are less than 25% of family income.

 

[Rain72]

Do folk who oppose using super to buy a home realise that you can do that now, PROVIDED you don't live in the home? You can buy as many investment homes with super as you wish, even borrowing in your super fund to do it. But don't dare presume to buy a home for your family to occupy. No. That would be shocking! We cannot have battlers able to afford a home of their own. That might upset the investors who are doing very nicely charging rents the battlers can't afford to pay.

 

[marni]

So now you want the taxpayer to buy you a home? In reality if you spend the super, then go on the pension you are actually asking taxpayers to fund your retirement. As a self funded retiree who cannot even access aged care I find this ridiculous

 

[havingadoggyday]

Maybe use 50% but keep 50%. It is tough trying to live on pension only.

Absolutely ,but I also think everyone is forgetting that superannuation was introduced so that you don't go on a pension and can support yourself in retirement,not as a savings account you draw on when you want THE HOUSE and then what,more pensioners to support later.Fouble edged sword

 

[havingadoggyday]

So now you want the taxpayer to buy you a home? In reality if you spend the super, then go on the pension you are actually asking taxpayers to fund your retirement. As a self funded retiree who cannot even access aged care I find this ridiculous

Absolutely Marnie.As a self funded retiree,we all scraped and saved and salary sacrificed so we could have a decent super and not burden the system.Seems to me we are the ones getting screwed again

 

[havingadoggyday]

With sensible limits on the type of home you can use super to buy or pay off, this would be a sensible reform. Super is useless if you don't have a home. Take the example of a couple in their early 50s still renting, but with $800,000 between them in super. By retirement, they will have well in excess of a million dollars, but will have paid out close to a million in rent. They can then buy a house that will likely cost them all of their super and leave them to draw a pension. If allowed to buy now, they can buy for maybe $750-$800K and still have some super and another 17 years to add to their retirement nest egg. They can save a lot more in the next 17 years because they are not paying rent.
Of course, they should NOT be allowed to buy a lavish home. They should be restricted to a basic dwelling or to drawing a limited amount of their super. But the current system is patently STUPID. It just forces people who can't afford to pay off a home to pay an exorbitant price for a home or continue to rent and be hard up in retirement. Only the non-thinking would think hoarding money in super while not having a home is sensible.

No one is hoarding anything
When the government I introduced super,it was for NO OTHER REASON THAN SAVING IT FOR RETIREMENT SO LESS BURDEN WITH LESS PENSIONERS.Since when has super "now let's see what we can do with it now idea".It was just that FOR RETIREMENT not to build the mcmansion,boat,2 cars,pool out the back compulsory and trip at least by yearly with family overseas

 

[havingadoggyday]

And you CANNOT fund your own retirement if you have to pay rent. A home is the FIRST necessity for a comfortable retirement.

Yes Luckyus, were where all these SDC members when super was introduced?? It was meant for nothing other than retirement,not a savings fund to buy anything.

 

[havingadoggyday]

As I understand, Super was bought to ultimately replace the age pension in effect you fund your own retirement without any assistance from government. Of course eventually they found out that were billions of dollars they couldn't touch, so then they started scheming on how they could their filthy on it. However If anybody can draw down on an amount for a mortgage, then I hope they stipulate that cash payment goes directly to the loan PRINCIPLE otherwise most of it will be lost on interest costs.

Where did you learn economics? I have a reasonably healthy super balance - enough that I don't qualify for any pension. If I had to pay rent, I would not be able to live on the income from my super and within 5 years I would be on a pension. How patently STUPID to think super is more benefit in retirement than a home! Who are the retirees struggling now and costing the govt money. THE RENTERS!
I am well off in retirement BECAUSE I bought and paid off a home before even thinking of saving for retirement. After 15 years of paying off my home, my accommodation cost was a very small portion of my income - a tiny fraction of what rent would have been costing me - so I was able to start saving for my old age.

Spot on,you should not be retirement age and still paying tent!!!If you have 800k between you in super you wages couldn't have been bad at all.Again people never think of retirement or getting old till they are.Drink yes,gamble,yes,smoke yes, trips yes Harley hell why not.....then oh we still are renting and need a bigger pension.......We really ARE the lucky country.

 

[havingadoggyday]

Australia hasn't invested in new houses to the quantity and quality that is required. Homeowners who already had equity in their own homes don't want the different types of housing such as duplexes, units, high- rise and tiny houses in their area because of lowering the value of their home, creating problems with access to views, changing the culture of the neighbourhood or cause increased congestion without the appropriate infrastructure. We are a culture who sees the value of home ownership but there are examples of cultures like Europe where there are satellite cities that have grown from necessity and that renting and the laws around renting allows tenants to have security of tenancy. We are a country where we predominantly live on the green coastal fringes or sprawling capital cities and that has it's own problems. Of course, there will be differing views, but we all believe it's a basic human right to have a home. But humans can be co-operative and innovative.

I totally agree with everything you have said except that some humans are not cooperative and innovative,they r stupid and giving them access the some or all their super just assures us even more that in their retirement years,there will be more pensioners as they have already spent it in their younger years

 

[Rain72]

So now you want the taxpayer to buy you a home? In reality if you spend the super, then go on the pension you are actually asking taxpayers to fund your retirement. As a self funded retiree who cannot even access aged care I find this ridiculous

So you would rather the taxpayer fund rent assistance? Or fund a higher aged pension because people had to wait until retirement to buy a home at 10 times the price they could have purchased it if allowed to access some of their super sooner? Sorry, you are not making sense!
Nobody is asking any taxpayer to buy them a home. But taxpayers DO fund retirement for those who cannot fund their own. And I would hate to think that would ever change, because I don't want our elderly left to wallow in poverty or die of starvation. I am also a self-funded retiree, and grateful that I was able to save enough to achieve that status. But I have struggled and I know how tough it is for some folk, and I think it's far more important for them to have a home than a bundle of super money. And I can't see how it makes a difference to the taxpayer whether someone is helped to pay rent, helped to buy a home, or helped to fund retirement after using their super to get a home of their own. Those who earn too little to be able to get BOTH a home of their own AND retirement savings need taxpayer support, and that will never change while society benefits from having some workers provide their labour at low cost.