Whilst KiwiSaver has been set up to facilitate saving for retirement, you may wish to consider withdrawing your current KiwiSaver savings as this could provide welcome funding for your first home purchase.
Two Choices
It is important to note that there are 2 categories under which KiwiSaver funds may be accessed to assist with the purchase of a home:
- KiwiSaver first-home deposit subsidy (set to double for new homes in April 2015 if National returns)
- KiwiSaver first-home savings withdrawal
Access is also permitted under either category even if you are purchasing bare land on which you will be building your home. These categories are not mutually exclusive, i.e. you may apply for both.
Where to Apply
If you want to use the deposit subsidy you should apply to Housing New Zealand. If you want to access via the savings withdrawal category you should contact your scheme provider.
You can obtain a pre-approval from Housing New Zealand which will be valid for 180 days. All applications should be made at least 4 weeks in advance – the subsidy will not be paid if settlement has occurred and you are already the owner.
Beware eligibility criteria
You should not assume that your KiwiSaver funds will be available for your purchase. You may also end up getting one but not the other. It is imperative that you check that you and the subject property both meet the different pre-requisites for each category, which include amongst other things, that you will have a deposit which is at least 10% of the purchase price, the property will be your only house and that the total value of the land and building will be within the maximum house price caps. House cap prices differ across New Zealand; in Auckland the current cap is $485,000. If National wins the election the cap will change to $550,000 in Auckland.
Useful Information
If you are looking at buying a first home then it would be eminently useful to gather the following information:
- Which scheme you belong to (members of complying schemes are also eligible)
- Who your provider is
- How long you have been contributing (eligibility is triggered after 3 years)
- What the current value is
If you are not sure of any of the above you should in the first instance check with your employer. Once you have some primary information it is often beneficial to discuss your options and any application with your broker, accountant, lawyer or other advisor.
This article has been written by Aman Prasad, Associate at Patel Nand Legal.
Feel free to contact him for your next home purchase on 09 522 2757 aman@patelnand.co.nz
