Using a KiwiSaver to Buy a House

 

You’re ready to jump on the property ladder. The KiwiSaver that you’ve been carefully growing is finally large enough for a house deposit. Now what?

Using a KiwiSaver to buy a house should be a straightforward process. But there are few basic things you need to know to guarantee smooth sailing when withdrawing your money, to finance your first home.

As a finance broker in Wellington and the wider region, I’ve helped countless Kiwis manage using their KiwiSaver to successfully secure their dream home. Get in touch for personal advice today.

Here’s what you need to know:

 

Check your eligibility

 

KiwiSavers are designed to help you save money for a deposit towards your first home. With that in mind, most people generally meet the criteria to withdraw money:

• You must have been saving with a KiwiSaver for at least 3 years.
• The property or land you wish to buy is in New Zealand.
• You haven’t made a withdrawal to buy a home before.
• The home you’re buying or building is intended for you to live in.
• It’s your first time buying property or land.

However, there are two exceptions to the rule that you can only make a withdrawal to purchase your first home.

Firstly, if you’ve previously owned a home before you may still be eligible to withdraw funds to buy a second home (more about that below).

Secondly, if your partner has previously owned a home but you haven’t, you can still apply.

 

How much can I withdraw?

 

The good news is you can withdraw the majority of your savings, except for $1,000 which must remain in your account. Also, any amount transferred from an Australian complying superannuation fund, and member tax credits if you lived offshore previously.

The withdrawal sum includes your own contributions, employer and government contributions, plus all investment returns.

How to make a withdrawal

To make the actual withdrawal you need to apply through your KiwiSaver provider.

The process differs slightly between providers, but typically they’ll ask for evidence of your eligibility, KiwiSaver balance, deposit amount, sale and purchase agreement/deed of nomination, and proof of identity.

Make sure you submit your application form as soon as possible. Aim for at least 10 days before you’re expected to pay your deposit on your property. But you would liaise with your lawyer and mortgage broker around the timing.

Kāinga Ora First Home Grant

One of the many benefits of a KiwiSaver is that you get access to a government grant to help buy your first home – the Kāinga Ora First Home Grant.

The grant gives you up to $10,000 towards your first home. Eligibility depends on a few criteria, including your income level and what type of property or land you’re hoping to buy.

One word of advice. Consider applying for pre-approval, before you start browsing property, so you know for certain if you’re eligible and exactly how much grant you qualify for. Getting in early can seriously reduce stress down the line.

‘Second chance’ home withdrawal

Although the KiwiSaver is widely known for helping first-time buyers, you might be surprised that second-time buyers can make use of it too.

A ‘second chance’ KiwiSaver withdrawal is available to qualifying previous homeowners. You qualify if:

• You’ve had a KiwiSaver for over 3 years.
• You don’t currently own or have a share or interest in any property (aside from Maori land ownership).
• You have not previously withdrawn any of your KiwiSaver balance to use to purchase a home.
• Your realisable assets do not amount to more than 20% of the house price cap for an existing/older property in the region in which you are intending to purchase your home.

Say you previously owned a home with an ex-partner but when the relationship ended you sold the property. Skip to the present, where you’re looking to purchase a home with your current partner: as long as you didn’t use a KiwiSaver to finance your first property, and you meet the eligibility requirements, you should be able to withdraw funds to purchase a home.

Everyone deserves a second chance!

Next Steps

Now you know more about using a KiwiSaver to buy your first home you can more confidently navigate the buying process. Take the plunge and get in touch with your provider today to start your withdrawal application.

Not sure if a KiwiSaver is right for you? Need help choosing a provider? Or maybe you want to align your savings with taking out insurance or a mortgage? Want to know how much you can borrow for your first home?

We’re here to help you by reviewing your individual situation and directing you to the best course of action. Get in touch to discuss your options, and secure financial freedom for you and your family.