Mortgage stress is hitting many Australians hard - and if you're feeling the pressure, you're not alone. Even though interest rates have started to ease, the cost of living is still putting pressure on many households. If you’re also dealing with reduced income due to illness, injury, or job loss, it can be tough to keep up with mortgage repayments.
If you're struggling to keep up with repayments, here are a few options worth exploring:
Accessing super early: what to know
Sometimes, when money gets tight—especially if you're dealing with mortgage stress—you might wonder if you can dip into your super early. While it’s possible in some cases, it’s not automatic.
Superannuation can be accessed when you meet a condition of release. The intention of super is to access once you retire after your presentation age (age 60). Early access means withdrawing prior to retirement, before reaching your preservation age or before meeting another condition of release. To do this, you’ll need to meet specific eligibility criteria set by the government, such as severe financial hardship or compassionate grounds.
Compassionate grounds
This is for situations where you’re at risk of losing your home. If you qualify, you might be able to withdraw a lump sum from your super to cover up to three months of repayments and 12 months of interest.
The application goes through the Australian Taxation Office (ATO), and you can apply online via myGov. If approved, you’ll get a letter from the ATO, which you’ll need to give to your super fund to release the money. You can find out more through the ATO website.
Severe financial hardship
If you're going through a tough time financially and are receiving Centrelink income support, you might be eligible to withdraw some of your super early under the severe financial hardship condition.
If you’ve been getting income support for at least 39 weeks after turning age 60, and you’re not working at least 10 hours a week, you can apply directly to your super fund to access your full super balance - no restrictions.
If you’re under 60 or haven’t met that 39-week threshold after turning 60, there’s still an option. You may be able to make one withdrawal per year, of up to $10,000, as long as:
- You’ve been receiving income support in the previous 26 consecutive weeks, and
- You’re struggling to meet reasonable and immediate living expenses, like mortgage repayments.
The application goes straight to your super fund. If approved, you can access between $1,000 and $10,000 in a 12-month period.
Remember, both the compassionate grounds and severe financial hardship options are there to help in tough times - but they come with conditions. So, if you’re unsure, start by contacting your super fund to find out - they can explain the eligibility criteria and guide you through the process. You may also want to speak to a financial adviser for personalised advice. They can help you understand what’s available and what’s right for your situation.
Is tax payable on the lump sum withdrawal?
If you're under 60 and you access your super early - say, under compassionate grounds or severe financial hardship - just know that tax may apply.
Your super fund will usually withhold tax before making the payment, and the amount depends on your age and the tax components on your super. Some parts of your super are tax-free, others are taxable, and any withdrawal has to be split proportionally between the two.
Taxation of lump sum payments
