Noel Whittaker
Noel Whittaker

Boost your deposit with a First Home Saver account

FIRST Home Saver accounts are a useful tool for young people who expect to buy their first home within five years.

They enable young people to boost their house deposit because the government is contributing 17% on the first $6,000 of funds deposited each year until the balance reaches $90,000, at which point no further contributions can be made. This is equivalent to a capital guaranteed tax free return of 17% per annum on top of the interest that will be paid by the bank. 

A further benefit is that interest on these accounts will be taxed at just 15%, the same as superannuation.  If a first home saver in the 30% tax bracket deposited $5,000, and received $250 interest for the financial year, tax would take just $37.50, leaving them with $212.50 in addition to their $850 from the government.  This is a total after tax return of 21.25%. 

The problem is that most banks have turned their backs on scheme and it can be difficult to find anybody offering these accounts. The easy way is to go to www.apra.gov.au and click on the link Authorised Deposits Taking Institutions. This will open up a menu which takes you to First Home Saver Accounts where the institutions still offering them are listed.

You will note there are some, like ANZ, that have an asterisk after them. This means they are no longer offering these accounts. The good news is that there are still 12 institutions with whom you can open a First Home Saver account.

Bear are mind there are conditions, such as the one that requires you to make a deposit of at least $1000 in four financial years before you can access the funds. As always, do your homework.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: noelwhit@gmail.com.


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