If you are making the first few steps into the home buying process, you will likely be interested in using your Kiwisaver to help buy the property. Kiwisaver is more than just a retirement scheme. It can be used to help you into your first home. There are two ways you can use Kiwisaver – by making a withdrawal and by receiving a First Home Buyers Grant from the government.
But how can you use your Kiwisaver to help buy your first home?
Kiwisaver First Home Grant
The Kiwisaver First Home Grant is a government grant that could go towards your first home. Typically, you can receive $5000 towards an older, existing home, or up to $10,000 for a newly built home or land that you wish to build a home on. You must have been contributing to your Kiwisaver for three years and meet other eligibility requirements.
This amount adds up if you are buying a home with another person. Combined grants can receive up to $20,000. For example, couples who wish to purchase a brand new home, and have each been contributing to their own Kiwisaver accounts for 5 years could be eligible to receive a total combined First Home Grant of $20,000.
The First Home Grant is great for buyers - both individuals and couples – looking to get their foot into the property door. It can help cover a good chunk of the deposit!
First Home Kiwisaver Withdrawal
A Kiwisaver first home withdrawal means you can withdraw your Kiwisaver savings and put it towards your first home purchase. After you have been contributing to your Kiwisaver for three years, and you meet eligibility requirements, you can make a withdrawal of almost all the money in your account to go towards your first home purchase.
First Home loan Scheme
You might be eligible for a 5% deposit under the 5% First Home Loan Scheme, instead of the typical 20% deposit requirement. This makes it that little bit easier for first home buyers to secure their first home. Our specialist financial advisors are also on hand to talk you through the process and help.
Check Eligibility for 5% First Home Loan
What Can You Buy?
Kiwisaver withdrawal funds can be used towards a range of property and land types.
You can use these funds for:
- A freehold: where you own the land typically anything build on the land
- A leasehold: when someone owns the land and you purchase the right to the land the buildings for a certain period of time.
- A stratum estate: such as a unit or apartment
- Interest in a dwelling house on Māori land
Steps to Completing the Kiwisaver Withdrawal Application
- Secure the First Home Grant pre-approval: Ths grant is valid for 6 months upon pre-approval, so it can be good to get this application in, even if you haven’t found the perfect property yet. If you do have a property with a successful offer in place, you will need to apply at least 4 weeks before the settlement date.
- Contact your Kiwisaver provider: Once contacted, you can start the withdrawal process. Your provider will typically need 10 working days to process the withdrawal. Allow enough time before your settlement date to avoid missing out on the funds. If you don’t have your Kiwisaver funds before settlement, you cannot use it.
- Gather supporting documentation: You’ll need a couple of important documents including -
- your ID
- a bank deposit number for your lawyer’s trust account
- a copy of the sale and purchase agreement of the property you are buying
- Either:
- A conditional agreement - completed by your solicitor if you are using your Kiwisaver funds to cover the deposit.
- An unconditional agreement completed by your solicitor if you are using your Kiwisaver funds to cover a portion of the deposit at settlement.
- Submit your application to your Kiwisaver provider: Including a statutory declaration which must be witnessed by a solicitor or Justice of the Peace.
Be Quick and Time Conscious
Submit your Kiwisaver First Home withdrawal application well in advance of the date you will need the money for a deposit or settlement. The process can take some time and each provider will take a different amount of time to complete. You don’t want to have to push out your settlement date or miss out on using your Kiwisaver altogether. If the property purchase has gone through, you can’t make a Kiwisaver First Home withdrawal.
Other Things to Consider
After the application has been processed and approved, the funds are transferred to your lawyer’s trust account, who will then send the money to the property’s vendor on settlement day. Settlement day is the day you will become the owner of your first home.
If the purchase falls through, assuming there wasn’t an error made on your part, the funds will need to be returned to your Kiwisaver account. Your lawyer can do this.
Kiwisaver withdrawals are not taxed. So the funds, upon withdrawal, are all yours to be used towards your first home deposit.
Maximise your Kiwisaver
If you can maximise your Kiwisaver, you will be able to pool a larger deposit for your first home, which will help offset some of the costs of the mortgage. Do your homework on the different types of KiwiSaver funds available and see whether you are in the type of fund that aligns with your home buying goal. You can also maximise your Kiwisaver account by increasing your contributions. Remember, your employer will match your contribution, so you’ll see steady growth in no time! You can also make lump sum contributions if you have extra funds available from savings.
Make sure you are doing a free health check of your Kiwisaver. In other words, make sure your Kiwisaver funds are performing and growing in a way that will most benefit you. Our friends at National Capital can help.
Further Reading:
Making the Most of your Savings? Should You Choose KiwiSaver or Explore Other Options?
Make Savings at Home by Comparing Bills
You can use NZ Compare’s plethora of comparison websites to compare your broadband, power, mobile and other money-related bills. By comparing all the plans and providers available to you, you can save hundreds of dollars across a range of utilities. Not only will it help ease the strain of saving for your deposit, but it will help you save money that you can contribute to your Kiwisaver. And when you move into your new home, use NZ Compare again to find the best deals for your utilities to help make sure you are getting the most value out of your hard-earned money and help ease the strain of your mortgage repayments.
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