Using Australian Super as collateral for mortgage

Ausmob, you probably need to ask the lending bank whether they will accept your preserved Australian superannuation benefit as collateral for a loan.


I don't think that the Australian superannuation legislation allows a bank or any other creditor to access your preserved benefit in the event of your insolvency so if I were the lending bank, I would be concerned about the liquidity of the superannuation as collateral.


However, it is possible to have an amount of your preserved benefit released to prevent foreclosure of a mortgage, or exercise of a power of sale over your principal place of residence. The legislation allows APRA (Australian Prudential Regulatory Authority) to assess applications for early release of benefits where the circumstances are consistent with, or in direct relationship to, certain specified grounds. Call APRA and ask them to explain this to you.


If I were you, I would also contact Centrelink and the Australian Tax Office directly with your questions. They give free and confidential advice and can consider the specifics of your situation. Centrelink financial advisors are really good with superannuation questions as two thirds of all centrelink payments are made to retirees. They really know the subject area.


Visit their websites for an number you can call in from internationally.


Finally, does your Australian superannuation policy include life insurance? Ask the lending bank (and ATO, centrelink etc.) whether they will treat the life insurance policy any differently.