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Raided your super? It could affect your ability to get a loan

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However, research from analytics firm AlphaBeta, a part of Accenture, and credit bureau illion found four in 10 Australians who dipped into their retirement savings under the second stage of the government’s super withdrawal scheme had experienced no drop in income during the pandemic.

The study analysed the depersonalised banking data of more than 10,000 Australians who withdrew superannuation after July 1.

Mortgage brokers are tightening their own screening of applicants after a recent spike in declined applications for loans with the major lenders.

Mortgage Choice broker Rob Lees said he had dealt with plenty of aspiring homeowners who had withdrawn their super to help them meet the 5 per cent minimum deposit. But some of those loan applications were declined because customers had not met the early release scheme’s eligibility requirements.

“[Applications were declined] at some banks more so than others,” he said. “Their argument is that you have withdrawn your super but you weren’t entitled to. You fudged it. That means there is an issue with your character.”

Sharon Xie, a credit manager at Home Loan experts, said one of the first questions brokers now asked customers was whether they had accessed their super.

“Lenders will require the potential borrowers to explain the circumstances for super withdrawal and if the eligibility criteria were satisfactorily fulfilled,” she said. “The other thing to take into consideration is how much your income has been impacted, and this may affect your borrowing capacity.

“To my knowledge, some deals were declined due to the lack of satisfactory explanation, or potential borrowers weren’t able to show any savings record and relying on the super funds as deposits purely.”

Introduced in March, the early release scheme allowed those in financial trouble to make a tax-free withdrawal of up to $10,000 from their super accounts last financial year, and up to another $10,000 this financial year.

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But there is a strict eligibility criteria: you must be unemployed, have been made redundant, had working hours reduced by at least 20 per cent since January 1 or, for sole traders, seen a fall of 20 per cent or more in turnover.

Those misusing the scheme face fines of up to $12,600 and could be hit with a tax bill on the withdrawn amount. To date, no fines or notices have been issued.

Other major lenders, including ANZ, Westpac, NAB and ING, said each loan application would continue to be assessed on a case-by-case basis.

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Xavier O’Halloran, the director of Super Consumers Australia, said the banks were right to ask for a complete picture of your financial situation and savings habits.

“People who have accessed their super are obviously trying to meet a pretty immediate financial situation,” he said. “They are probably not thinking long term on what the impact might be on refinancing or taking out a loan in the first place.”

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