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How to use KiwiSaver to buy a home
Get into your first home by using your KiwiSaver contributions thanks to the first-home withdrawal.
Even though KiwiSaver was introduced in 2007, it wasn’t until 2015 that people could withdraw funds to contribute toward a home purchase. KiwiSaver originated as a long-term savings scheme to assist New Zealanders with planning for their retirement, but you can now use your contributions to access the property market.
If you are struggling to save for a house deposit but have built up your KiwiSaver savings, you can use these funds thanks to the first-home withdrawal.
KiwiSaver first-home withdrawal explained
The first-home withdrawal helps Kiwis that want to buy their first home. It allows you to withdraw funds from your KiwiSaver to put towards purchasing a new or existing home, a house and land package, or land only. You can also use your withdrawal to buy a house on Maori land if you show that you have the right of occupation. One restriction that does apply is if you already own land or have been gifted land from someone else. If this is the case, you can’t build a house on that land using your KiwiSaver savings.
You may want to use your funds for a deposit towards a mortgage, which is often 20% of the purchase price. You can also use it for the purchase deposit, which secures your agreement to buy a home and is usually 10% of the property value.
If you receive approval, your solicitor receives the funds from your KiwiSaver on or before your new home’s settlement day. They then forward it to your bank to use as part of your deposit.
You may also be eligible for the First Home Grant, which can provide funds of up to $20,000 for a couple that have been contributing to KiwiSaver for at least three to five years. The grant value depends on how many years you have been contributing and whether you are buying a new or existing home, but you don’t need to pay it back.
While Kāinga Ora administers the First Home Loan and First Home Grant, your KiwiSaver provider manages the first home withdrawal, so this is who needs to receive your application. The only time that Kāinga Ora becomes involved is if you have previously owned your own home in the past.
How much of my KiwiSaver can I use?
Your KiwiSaver account can include contributions made by yourself, your employer and the government, plus any investment return. A first-home withdrawal allows you to withdraw as much money as you need to purchase your home, including tax credits, as long as you leave a minimum balance of $1,000.
The only money that you can’t withdraw is any funds transferred from an Australian Superannuation scheme, which need to stay in your KiwiSaver account until you retire.
It’s a good idea to get pre-approval for your first-home withdrawal, just in case the amount that you can withdraw is different from your expectations.
Am I eligible?
To be eligible for the first-home withdrawal, you need to meet the following criteria:
- You should be purchasing your first home
- Be a KiwiSaver member for at least three years
- Be in a KiwiSaver scheme that allows withdrawals
- You must not currently own a home or any land
- You should intend to live in your new home for at least six months
There are no restrictions on your income or property value.
If you have previously owned a home, it’s still possible to take advantage of the first-home withdrawal, provided you have not used the scheme before, and your financial situation equals that of a first home buyer.
As the policies of KiwiSaver providers differ, it’s worth checking with yours about their particular criteria before you apply.
How do I apply for a first home withdrawal?
First home buyers
If you are purchasing a home for the first time, you should apply for pre-approval through your KiwiSaver provider as soon as possible, so you can receive an estimate of how much you can withdraw.
You apply as an individual, even if you want to buy a home with your partner or spouse. You can pool your money as long as you meet the eligibility criteria and make separate applications for withdrawal. If your partner has previously owned a home, only you can use your KiwiSaver funds unless special exemptions apply. When pooling money, it is worth having a legal agreement that protects each person’s investments, especially if one contributes more money than the other.
Once you find the home you want to purchase and have an unconditional agreement, you need to fill in an application form, sign a statutory declaration and provide copies of supporting documentation.
Your property lawyer is the best person to apply for you, as they can check that you have completed everything correctly and documentation is in order. They also need to supply a letter regarding the purchase of the home, deposit and settlement dates, and if the purchase agreement is conditional or not. They can then be notified of any issues with your application and manage these on your behalf.
Depending on your KiwiSaver provider, they may need up to 15 working days to process your application, which could take longer if something is not in order. If you don’t apply in time and your funds don’t arrive before the settlement date, you cannot use them towards the purchase, and it’s not possible to take out a loan and use your KiwiSaver funds to pay back this loan later. You then miss out on using the first-home withdrawal, and you can’t access your savings until you retire.
If you are a previous homeowner, there is an extra step involved as you need to prove that you are in a similar financial situation to a first home buyer. Before applying, Kāinga Ora assesses your circumstances and issues a letter to give to your KiwiSaver scheme provider. You can start the process by completing the KiwiSaver first-home withdrawal determination for the previous homeowner form on the Kāinga Ora website, which can take a minimum of 20 working days, so it’s best to get your application in as soon as possible.
If you also want to apply for the first home grant, you must complete a separate application.
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