Guide to First Home Saver Accounts – Compare & Apply Online
First Home Saver Accounts Comparison
These special home saver accounts are aimed at people are looking to buy their first home in roughly 4 years time after account opening.
If you are in a position to buy your first home within a 4 year period, then these kind of saving accounts are not going to be for you. Check out our first home buyers guide to find a suitable home loan. You may also be interested in opening a high interest savings account instead, which gives you the flexibility to withdraw your savings at any time.
If you sign up to a first home saver account, and then buy your home after a year, the money you have already saved will be locked into the account, and you will not be able to use it for your deposit, or even as money to make mortgage payments.
Basic features of account
- Low rate of tax on interest at a rate of just 15%
- Government makes contributions into the account. They will pay up to 17% of what you put into the account.
- The banks will normally pay an interest rate too.
First home saver accounts can be provided by many types of financial institutions including all the major banks and building societies, and also life insurance companies, and credit unions.
These accounts were initially introduced by the Australian government, who felt they would provide an important incentive for people to begin saving for a home.
In October of 2008 the first home saver account was launched. Although each individual provider of accounts are allowed to decide on their own rates, and charges, they all have to fall in line with the set government rules, set up to help regulate the scheme.
How do I apply?
There are not a huge amount of rules on application, as long as you are between the ages of 18 and 65, have never owned and lived in your own property, and have your own tax file number you are able to apply.
What to look for
First home saver accounts are already widely available from most banks, and building societies, and most of them work in much the same way as general transaction accounts. The returns available with these accounts will vary from company to company, however their are certain characteristics you should look out for when seeking an account, in order to ensure you are getting a fair deal on fees, and a good deal on interest.
A good first home saver account should have:
- No fees charged for account upkeep
- No fees for switching
- No charge for deposits made
- No minimum requirement of deposits in order to have the best interest rate
- Interest that is worked out daily, but paid to you monthly
- An interest rate that as a minimum equals the Reserve Bank of Australia’s base cash rate
Even once you have opened an account somewhere, it is worth keeping your eyes open to see what others are offering. You do have the ability to switch to a different provider, if you spot a better deal elsewhere.
Top Australian Savings Accounts
| Home Loan | Details | Interest Rate (p.a.) | Comp Rate^ (p.a.) | App Fee / Ongoing Fee | Max LVR | Min & Max Borrowing | |
|---|---|---|---|---|---|---|---|
 UBank USaver |
Try the new UBank USaver out for yourself. |
6.01% | 5.41% | 0.60% | 0 | $0/$0 |
 
|
 Citibank Online Saver |
Citibank offer an incredibly high interest rate, and the safety of being with the worlds largest banks. |
5.80% | 4.75% | 1.05% | 0 | $0/$0 |
|
 ANZ Online Saver |
Open an ANZ Online Saver to take advantage of one of this fantastic bonus rate. Limited time only! |
6.00% | 4.25% | 1.75% | 0 | $0/$0 |
|
 HSBC Serious Saver |
Enjoy an introductory variable rate. Limited time only! |
5.80% | 4.75% | 1.05% | 0 | $0/$0 |
|
 Virgin Saver Account |
A great savings account from Virgin Money |
5.85% | 4.65% | 1.20% | 0 | $0/$0 |
|
How does this scheme work?
- The government will pay 17 cents to every dollar that you pay into your first home saver account.
- There is a yearly maximum of $850 that the government will pay, so if your yearly deposits total $5000 then you will gain an $850 top up from the government. You can pay more than $5000 into the account within a financial year, but only the first $5000 will qualify to receive the government top up.
- You will not receive the top up into your account straight away, but the financial year after the First Home Saver Account provider puts in it’s tax reports.
- There is a fairly low interest charge of just 15% that applies to the interest earned in your account. That tax payment is organized by the provider, not the customer.
- Before you are able to make withdrawals from your account you have to have either held the account open for at least 4 years,(note it does not have to be4 years in a row), or made deposits of at least $1000 in each of those years.
- Once government contributions, personal contributions, and interest have been taken in to account the current maximum balance allowed on these accounts is $75,000.
- The only withdrawal allowed is one that will allow you to buy, or start building a first home. If you decide at any point to close your First Home Saver Account, then all monies within the account will transfer into a super fund.
Deposit accounts compared
Here is a table showing some different accounts compared.
| First home saver accounts comparison | |||||||
| Institution | Variable interest rate (%, pa) | Reason not recommended |
Account fee | Interest credited | Minimum deposit |
Switch/exit fee | Any other details |
| (listed by maximum interest rate) | |||||||
| Members Equity Bank
|
6.25 | NA | No | Monthly | No | No | |
| ANZ Bank | 5.00 |
NA
|
No | Monthly | No | No | |
| NSW Teachers Credit Union
|
5.00 | NA | No | Monthly | No | No |
Available to all eligible Australian residents.
|
| Hume Building Society |
4.25 | NA | No | Monthly | No | No | |
| Victoria Teachers Credit Union |
5.00 | NA | No | Quarterly | No | No |
Home loan establishment fee non payable for new home loan customers who held a First Home Saver Account with the credit union
|
| Big Sky
|
4.35 | NA | No | Monthly | No | No | |
| AMP Bank
|
4.50 | NA | No | Monthly | No | No | |
| Police Credit |
3.75 | NA | No | Quarterly | No | No |
Membership only available to certain people, these include members of police-force, emergency services, doctors and nurses, public services, and their families
|
| Other accounts (listed by maximum interest rate) | |||||||
| Defence Force Credit Union |
4.50 |
Exit fee, interest paid yearly
|
No | Annually | No | $30 | |
| Commonwealth Bank | 5.00 |
Interest paid yearly
|
No | Yearly | No | ||
| Wagga Mutual Credit Union | 3.50% plus 1% bonus (see other details) |
Interest paid yearly
|
No | Yearly | No | No |
If you get a home loan from Wagga Mutual after the completion of the four financial year term you will receive an special bonus 1% interest.
|
| Hunter United Employees Credit Union (Hunter United) |
3.45 |
$30 fee to close or transfer the account
|
No | Quarterly | No | $30 |
Home loan application fee waived for applicants as long as you use your first home saver account to buy your first home
|
| MyState Financial
|
3.25 |
$500 minimum opening balance
|
No | Quarterly | No | No | |
| Wyong Council Credit Union
|
0.00-3.00 |
No interest paid until balance reaches $1000
|
No | Quarterly | No | $30 |
Credit union membership is only available if you work for Wyong Council or you are a family member of an employee.
|
These interest rates are correct as at May 2010.
Notes in regards to this illustration
NA=Not applicable
Unless mentioned, all rates are variable
The table covers most providers of first home saver accounts in 2009. Also because rates are variable they can rise as well as fall.
State Custodians Mortgage Company Standard Variable Home Loan
The 2010 Your Mortgage Magazine First Home Buyer Home Loan of the Year.
- Interest Rate of 6.47%
- Comparison Rate of 6.69%
- Application Fee of $0
- Maximum LVR With LMI: 90%
- Minimum Borrowing: $150,000
- Maximum Borrowing: $1,000,000
There are also some first home saver accounts from some institutions which are not included in the above table.
- IMB
- Satisfac Direct Credit Union
- Plenty Credit Co-operative
- Police Association Credit Co-operative
To recap
Here are the features that you should look out for when looking for a first home saver account.
No fees to be paid for:
- Monthly upkeep
- Making deposits
- Switching providers
There will ideally be:
- No minimum deposit required to unlock higher interest rate
- Interest rates that are the same for everyone, and does not reflect the size of your balance.
- At least equals the Reserve Bank Australia’s base rate
- An interest structure where interest is worked out daily and then paid to you monthly.
- No minimum deposit required to open an account.
- There should be the facility to take payment breaks without having to forfeit interest.
These markers will give you the ability to make transactions without charge, have a fair and just interest rate, and the flexibility to be able to increase, or decrease deposit amounts as you can afford them.
Different kinds of investment accounts
The government rulings accommodate two different types of first home saver accounts. The normal deposit accounts which are very similar to traditional bank accounts, and then the Investment fund first home saver account.
Although at present there are no investment First Home Saver Account’s on the market, one firm Superannuation Services Limited does hold a license to provide them.
Investment First Home Saver Account’s work more along the lines of a super account or a managed fund, and of course also carry with them the normal risks you’d expect with these accounts.
Providers will generally give you options in regards to the level of risk you wish to expose yourself to. So for example a “low risk” account will provide less growth, but less committed risk, whilst a “growth risk” account will give you a much higher potential for growth, but will also expose you to more financial risk, and of course the same way investments can go up, they can also come down, and you may not receive the full amount that you deposit.
High risk versions of this account are fine as long as you are happy to take the financial risks associated with these accounts, in the hope of a better return. First Home Saver Account’s are considered a medium to long term investment which is also something to take into account.
Before you decide to take up an investment style first home saver account it would be worth investigating the following things:
How will they invest- Investigate how your money will be invested. What is the providers investment strategy. Are they more inclined to invest in property, and other higher risk assets, or are they more interested in safer choices like deposit funds, and fixed income investments.
Returns are not fixed- When you have an investment First Home Saver Account remember you may not get back everything you invest if your investment loses money. You should decide whether you wish to take a safer option where there is less risk, but less growth, or if you prefer to take a higher risk account, but with the possibility of a much better return.
If you have a fund where your money is invested in shares, and similar assets there will be ups, and downs. Bear in mind it is the final figure that is important, so do not worry too much every time there is a small drop in your investment.
Check out the fee structure- Be sure you understand how the provider charges fees for exit, upkeep, management, and also entry fees. You may lose a chunk of your investment if you have not been aware of the fees associated with your account. There may be management, or entry fees for example which can be charged up to 1% of your full balance.
Will a financial adviser take a cut? With some non-managed first home saver accounts, there are entry fees, of which a portion will be paid to a financial adviser who may have suggested investing in the provider. It is not clear as yet whether there will be a similar commission structure in place for the Investment First Home Saver Account’s, but be sure to check it out.
How much can I make?
The illustration below will show how much you can make with a First Home Saver Account depending on how much you save, and how high the interest rates. There are calculators online that will give you exact figures based on your own savings, and interest figures.
Growth on an First Home Saver Account based on 4% interest rate per year.
| First Home Saver Account approximate growth assuming 4% average interest per annum | ||||||||||
| Your annual savings ($) | 1000 | 2000 | 3000 | 4000 | 5000 | 6000 | 7000 | 8000 | 9000 | 10000 |
| 1st Year |
1,204 | 2,408 | 3,612 | 4,816 | 6,020 | 7,054 | 8,088 | 9,122 | 10,156 | 11,190 |
| 2nd year |
2,449 | 4,898 | 7,347 | 9,736 | 12,245 | 14,348 | 16,451 | 18,554 | 20,657 | 22,760 |
| 3rd year |
3,736 | 7,472 | 11,209 | 14,945 | 18,681 | 21,890 | 25,098 | 28,307 | 31,516 | 34,724 |
| 4th year |
5,067 | 10,134 | 15,202 | 20,269 | 25,336 | 29,688 | 34,040 | 38,391 | 42,743 | 47,095 |
| 5th year |
6,444 | 12,887 | 19,331 | 25,774 | 32,218 | 37,751 | 43,285 | 48,819 | 54,352 | 59,886 |
| 6th year |
7,867 | 15,733 | 23,600 | 31,466 | 39,333 | 46,089 | 52,845 | 59,601 | 66,356 | 73,112 |
| 7th year |
9,338 | 18,676 | 28,014 | 37,352 | 46,690 | 54,710 | 62,729 | 70,749 | (A) | (A) |
| 8th year |
10,860 | 21,719 | 32,579 | 43,438 | 54,298 | 63,624 | 72,950 | (A) | (A) | (A) |
| 9th year |
12,433 | 24,866 | 37,298 | 49,731 | 62,164 | 72,841 | (A) | (A) | (A) | (A) |
| 10th year |
14,059 | 28,119 | 42,178 | 56,238 | 70,297 | (A) | (A) | (A) | (A) | (A) |
This table assumes that:
- The amount you deposit does not change.
- Interest rates do not go up or down.
- All deposits are made at the start of the year, so interest is earned over the whole of the year.
- Interest is worked out and paid annually. Normally providers tend to pay interest monthly in which case you would actually earn more money than shown in the illustration.
- The government top up is paid to the balance at the end of the year, and so starts earning interest at the beginning of the following year.
Bear in mind that your balance cap on First Home Saver Accounts is set at $75,000, so once that has been reached you personally are not able to make any more deposits. You will still earn interest on the account however, so you can still increase your final balance.
Real life example
Barry is 24, he has left education and works full time. Living with his parents, he decides he wants to rent for now, and save for his first home.
He opens a first home savers account with an interest rate of 4%. He settles on making a monthly deposit of $200 per month into his account, which his parents agree to match for him.
So with Barry, and his parents contributions he will pay $4800 into his First Home Saver Account each year. The government will then pay in their contribution of $816.
If over a period of 5 years, there is no change in interest rates, then his account will house a total of $30,929.
Even with the first home owner grants of $7000 available to some, and Barry’s total First Home Saver Account, he would still only have around 8% of the average cost of a home in Melbourne (Roughly $400,000).
Although he would still be a little short, a first home saver accounts would still give him a better return, than if he invested the same amount of money into an Internet savings account.
If he could afford it, then an increase in his monthly contributions would put him closer to where he needed to be for an affordable home deposit.
Complete guide
Can I apply?
As long as you have never owned your own property, are between the ages of 18 and 65, and finally have a tax file number.
Could I buy a home within 4 years?
If you will be able to afford to buy a property before hand then there is little point in opening one of these accounts. Any deposits made are tied up and non withdraw-able unless you are paying for a home.
Are first home saver accounts more tax efficient?
A certain amount of people will find that they pay more tax in a regular savings account than they would with an First Home Saver Account, because in a normal savings account the tax reflects your income tax rate. 15% which is what you will pay with an First Home Saver Account will of course work out less.
If on the other hand you do not pay tax, then you will probably benefit more from just leaving your money in a high interest account, and waiting until the end of the financial year before opening your first home saver account. That way you will benefit from the full government contributions.
Investment vs Deposit- Which will suit me best?
There is no right or wrong answer here as it is really down to personal choice. You need to look at both alternatives, and see which you feel most comfortable with. A deposit account is much more stable, but will provide you will little increase on your investment, whilst an investment version of a First Home Saver Account will provide a much better chance of increased earnings, but will leave you open to fluctuations. You could in theory actually lose money with a high risk investment account.
Compare the market
There are many providers to choose from so have a look at all your options before choosing your provider. Look at the full terms and conditions, and any other costs or fees that may be disguised.
Any questions?
My son wishes to open account. Can I open one on his behalf?
You cannot open one on his behalf, but as long as he is over 18 he can open his own, and you can then make contributions for him.
Both myself and my boyfriend have First Home Saver Account’s. Can we combine our savings to pay for a deposit?
You can, on the one condition that at least one of you fulfils the 4 year obligation then your savings can be combined.
If I wanted to could I salary sacrifice into my First Home Saver Account?
Afraid not. This is because any contributions made must be from an after tax income.
If my salary fluctuates could I take a payment break?
You can. The only rule is that you must pay a minimum of $1000 per financial year. The 4 years required do not have to be consecutive which gives you even more freedom.
I’ve had a First Home Saver Account for 2 years but have had a little windfall.
Can I withdraw and buy my home now?
You will not be able to withdraw your fund if you have not completed the 4 year obligation. IF you decide to buy a property with your windfall money, and then go on to live in that property, then your first home saver account will be shut, and any balance will be switched across to a super fund.
Because these accounts are considered medium to long term investments, and because they are government backed, it is really worth taking your time working out exactly what you need from your fund, how much you can afford to pay, and what will give the most for your money.
Check out some of the leading first home buyer loans.
Related posts:
- First Home Saver Account Scheme (FHSA)
- First Home Saver Account Changes To Benefit More Aussies
- Rams Rent Saver
- Starting a First Home Saver Account
- Save for Your Deposit with the Virgin Saver Account
- Virgin Home Loans, Credit Cards and Savings Accounts
- First Time Home Buyers Guide
- Redraw Vs Offset Accounts Explained
- membersequity.com.au/ Members Equity Online Banking
- 40 Year Home Loans – Why apply for the extra time?
Top Home Loans
| Home Loan | Details | Interest Rate (p.a.) | Comp Rate^ (p.a.) | App Fee / Ongoing Fee | Max LVR | Min & Max Borrowing | |
|---|---|---|---|---|---|---|---|
 Loans.com.au - Dream Catcher​ | A home loan offer with a $0 application fee and one of the lowest available home loan interest rates. | 6.13% | 6.47% | $0 / $375 | 80% | $50,000 / $750,000 |
 
|
 UBank UHomeLoan (Variable Rate) | One of the market leading variable interest rates. The maximum loan amount needs to be 80% of the property value. | 6.14% | 6.14% | $0 / $0 | 80% | $100,000 / $1,000,000 |
|
 State Custodians Mortgage Company Standard Variable Offset Loan | Awarded the 2011 Non bank Lender of the Year this feature-packed loan rewards customers with a bonus rate drop of 0.20% after 5 years. | 6.22% | 6.45% | $0 / $345 | 95% | $150,000 / $2,500,000 |
|
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