5 Key Facts About Using KiwiSaver for Your First Home
Are you considering using your KiwiSaver funds to buy your first home? If so, you’re not alone. Many Kiwis are taking advantage of this opportunity to make homeownership a reality. The KiwiSaver scheme is a government initiative in New Zealand designed to help people save for retirement and get onto the property ladder.
Before diving into the specifics, it’s essential to understand what KiwiSaver first home withdrawals are. KiwiSaver is a long-term savings plan specific to New Zealand, designed to help kiwis save for retirement. However, one of its significant benefits is the ability to withdraw funds to purchase your first home.
This option allows you to use your hard-earned savings to assist with the costs of buying a home.
However, there are specific rules and criteria you must meet to qualify for a KiwiSaver first home withdrawal
Eligibility Criteria for KiwiSaver First Home Withdrawals
To be eligible for a KiwiSaver first home withdrawal, you must have been in KiwiSaver for at least three years and meet the following criteria:
You have not previously owned a property
If you are a previous homeowner, you may still qualify if you are in the same financial position as a first home buyer. Kāinga Ora will assess your financial position to determine eligibility for previous homeowners.
The property will be your primary residence
The property you purchase must be your primary residence and cannot be an investment property. You can use the withdrawal to buy a home or land to build your first home.
You intend to live in the home
Kāinga Ora will assess your financial position to determine eligibility if you are a previous homeowner.
KiwiSaver Membership
You need to have been in KiwiSaver for at least three years. This means actively contributing to your KiwiSaver account throughout this period.
First Home Buyer Status
You must be a first-time home buyer. However, a previous homeowner or previous home owner may still be eligible if they are in the same financial position as a first home buyer. If you have previously owned a property but meet specific criteria, you may still qualify as a first-time buyer under the ”second-chance home buyer” category.
Property Purchase Type
You can use your KiwiSaver withdrawal to buy a home or land to build your first home. The property must be intended for personal use as your primary residence investment property or holiday homes do not qualify for KiwiSaver withdrawals.
Minimum Balance Requirement
At the time of withdrawal, you must have a minimum balance in your KiwiSaver account. The exact amount may vary depending on your provider, so it's essential to check with them directly.
How to Apply for a KiwiSaver First Home Withdrawal
Once you confirm your eligibility, the next step is to apply for a first home withdrawal through your KiwiSaver scheme provider. You will need to contact your scheme provider to begin the process and obtain the necessary forms and documentation. The process involves several steps, so let’s break it down.
Gather Necessary Documents
Before applying, ensure you have all the required documents ready. These typically include:
Proof of KiwiSaver membership
Identification documents
Sale and purchase agreement for the property
Solicitor or conveyancer's details
Complete the KiwiSaver First Home Withdrawal Form
Next, complete the KiwiSaver first home withdrawal form.
This form will require information about your KiwiSaver account, the property you’re purchasing including the agreed purchase price and the financial institution handling your mortgage. Be thorough and accurate to prevent delays. Once completed, submit the form to your scheme provider.
Submit Your Application
Submit your completed application form and all supporting documents to your KiwiSaver provider. They will review your application and, if approved, arrange for the funds to be transferred to your solicitor’s client account. The money withdrawn from your KiwiSaver will be paid directly into your solicitor's trust account (also known as a trust account) to be used for the property purchase. Your real estate agent may also be involved in coordinating the deposit and settlement process.
Timing Your Application
It’s crucial to time your application carefully to ensure it is processed in time for the settlement date. KiwiSaver providers typically require at least ten working days to process a withdrawal application, so make sure to factor this into your property settlement timeline.
KiwiSaver Withdrawal Amounts
One of the most common questions is, "How much can I withdraw from my KiwiSaver for my first home?" The answer depends on your KiwiSaver fund balance and the types of contributions made, including your own contributions, employer contributions, government contributions, fee subsidies, and voluntary contributions.
KiwiSaver First Home Grant
In addition to using your KiwiSaver savings, you may also be eligible for the KiwiSaver First Home Grant. This grant provides extra financial support for first-time homebuyers and can be used towards buying your first home.
Grant Eligibility
To qualify for the KiwiSaver First Home Grant, you need to meet specific criteria, including:
Regular KiwiSaver contributions for at least three years
Income and price cap limits
Purchase of a new build or existing home
The grant amount varies depending on the type of property and the duration of your KiwiSaver membership.
Applying for the Grant
To apply for the KiwiSaver First Home Grant, you must complete a separate application with Kāinga Ora. The grant can significantly boost your home-buying budget, so it's worth exploring if you meet the eligibility requirements.
Conclusion
Using KiwiSaver to buy your first home is a fantastic opportunity. KiwiSaver allows for early withdrawal of funds, enabling you to access your money sooner for a first home purchase. By understanding the eligibility criteria, application process, and potential impact on your retirement savings, as well as the specific details of your KiwiSaver scheme and KiwiSaver fund, you can make informed decisions to achieve your homeownership dreams.
Remember, before proceeding, consult with your KiwiSaver provider and seek advice from a financial adviser to ensure that you make the best choices for your unique situation.