If you’re thinking about buying a first home, your thoughts may have drifted to your KiwiSaver account.
The retirement savings vehicle is proving a big help to an increasing number of people trying to get into their first properties. If you’ve been putting money into KiwiSaver, you can use not only your own contributions but those of the Government and your employer to form part of your deposit. What’s not to like about that?
If you’re planning to tap into your KiwiSaver account, there are a few criteria to meet.
You must have been in KiwiSaver for at least three years before you can withdraw your money for a first home. You can withdraw all the money in your account, except for $1,000.
You’ll also need to not have owned a house or land before – unless you can demonstrate that you’re in the same financial position as someone who hasn’t (perhaps because you’ve been through a relationship split).
Anyone using KiwiSaver funds to buy a house must also live in it for at least six months. And lastly, if you’ve transferred money from an Australian superannuation savings account, keep in mind that you won’t be able to withdraw that money.
Depending on your circumstances, your KiwiSaver money may not be all you can access.
If you meet the criteria, you could also get some extra funding from the Government to help you along the way. It offers a First Home grant that is designed to supplement your deposit.
This is available to single people who earn up to $85,000 a year or couples earning $130,000 before tax. There are also property value criteria to meet – click here to find out what the price cap is in your area.
How much you can qualify for through the First Home grant depends on whether you’re buying an existing house or one that’s being built or has a code of compliance issued less than six months ago.
If it’s an existing house, each contributing member qualifies for $1,000 per year of membership up to a maximum of $5,000. A new build gives you access to $2,000 per year of membership up to a maximum of $10,000 or $2,000 for each year, provided you meet the income and house price conditions.
The grant is available per buyer, so if you’re purchasing as a couple you can both access it. If you’re buying with a group of friends, each can access grants but the total amount will still max out at $10,000 or $20,000, depending on the age of the house.
You will need to allow about two or three weeks for a first-home withdrawal application to be processed by your KiwiSaver provider. The money usually goes to your solicitor, who handles having it paid to the vendor when it’s time to settle on the property.
When you apply for the withdrawal, you’ll have to fill in a statutory declaration, supply a letter from your lawyer and a copy of your ID. You’ll also need a copy of a sale and purchase agreement showing you as the purchaser of the property. We can help you make sure you tick all these boxes.
You can use your money to buy a freehold, leasehold or stratum estate property. That can be an existing house, a vacant residential section, apartment off the plans or a house and land package. If you already own the land, though, you can’t use your KiwiSaver money to build a house on it.
If the purchase doesn’t go ahead your lawyer will likely need to return the money to your KiwiSaver account. You cannot apply once the settlement has happened, so it’s important to get sorted relatively early in the process.
On your way to home ownership? Please get in touch: We can explain how the KiwiSaver withdrawal process works, and help you make the most of your funds.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance. This information is not investment advice or a recommendation or opinion on the suitability of withdrawing from your KiwiSaver fund to purchase a home. As KiwiSaver is primarily a retirement savings vehicle, we recommend you seek advice about the impact of a withdrawal on your retirement fund goals.