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Becoming the first of the big four banks to do so in 2024, NAB has cut its fixed rate by 0.6 percentage points.
The old rate for a three-year 30 per cent plus deposit was 6.59 per cent and for a three-year less than 30 per cent deposit was 6.64 per cent. Now, both have been slashed by 0.6 per cent, bringing the total to 5.99 per cent and 6.04 per cent, respectively.
Does this make fixing any more attractive? Well, obviously more attractive than it was this time last week, but fixing for a three-year period is a substantial financial commitment, especially with the uncertainty of cash rate changes. What it does hint at however is that the tide may be starting to turn. But we’ve said that before only to be proven wrong.
In this week’s newsletter, we look at downsizer super contribitions and how they work.
Downsizer contributions allow older Australians to sell their current home, purchase a smaller one, and contribute the difference into their superannuation account. As of 1 January 2023, the eligibility age for downsizer contributions has been lowered to 55. Previously, the minimum age was 65.
Eligibility and Rules
Age Requirement: You must be at least 55 years old when making the contribution. There is no upper age limit, even beyond 75 when normal super contributions are restricted.
No Work Test: There is no requirement to be in paid employment, and you cannot claim a tax deduction for downsizer contributions.
Contribution Limits
Contribution Cap: Up to $300,000 can be contributed per person ($600,000 for a couple) from the sale proceeds of your eligible home.
Sale Proceeds: The contribution limit is the lesser of $300,000 and the actual sale proceeds. Gifting your home means you cannot make a downsizer contribution.
Benefits
Exemptions: Downsizer contributions are exempt from the usual contribution caps and do not count towards your annual concessional or non-concessional contributions.
Additional Contributions: You can make downsizer contributions in addition to your regular super contributions without worrying about exceeding cap limits.
Home Eligibility
Ownership Period: You must have owned the property for at least 10 years.
Main Residence: The property must be your main residence at the time of sale or partially exempt from capital gains tax under the main residence exemption.
Ineligible Properties: Investment properties you haven’t lived in, caravans, houseboats, mobile homes, and vacant land are not eligible.
Post-Sale Rules
No Requirement to Buy: There’s no obligation to buy a new home or a cheaper one after making a downsizer contribution.
One-Time Use: You can only use the downsizer rules once, and they cannot be applied to the sale of a second home or a remaining interest in the property.
Variable
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR.
1 Year Fixed
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR. At the end of the three year fixed period, the borrowers interest rate will revert to a standard variable rate for the life of the loan.
