When you first think of KiwiSaver, you might imagine how you hope you spend your golden years. Do you want to retire by the beach? Around family and friends? Or taking off on new adventures? Well, while Kiwisaver is absolutely an investment towards retirement, it can also be used for buying your first home?
The government has recently withdrawn the First Home Buyers Grant. So, there are now two ways you can use your Kiwisaver for your first home purchase.
First Home Kiwisaver Withdrawal
Many employed Kiwis contribute to their Kiwisaver fund whenever they get paid. Their employers will also match your contributions. This money adds up over time, and can be withdrawn to be put towards your first home deposit. There are eligibility criteria, including that you must have been contributing to your Kiwisaver for at least 3 years.
First Home Loan Scheme
Most home loans require a 20% deposit. However, with KiwiSaver, you may be eligible for a deposit of just 5%, making it that little bit easier for first time buyers to get into the market, without having to save as much of a deposit. We have a hub of mortgage advisors who are on hand to help you with any home loan questions you may have, including whether you may be eligible for the 5% deposit to secure a home loan. Click the button below, and a fully qualified mortgage advisor will be in touch with you.
What Can I Buy?
If eligible, you can withdraw your Kiwisaver funds to purchase one of these types of properties:
- 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.
How Do I Withdraw My KiwiSaver?
- Secure your home loan pre-approval: This is the ballpark figure for how much money your lender will allow you to borrow to purchase a home.
- House hunting: Once you have found the home of your dreams, and made an offer that’s accepted, you can make steps to withdraw your Kiwisaver funds.
- 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 your Kiwisaver funds have not arrived with you by settlement date, you cannot use it. Don’t waste this opportunity!
- Collect 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.
Time is of the Essence
It is important that you submit your application for your First Home withdrawal with plenty of time before your settlement date, as you will need the money on this day. The application and processing can take time, with each KiwiSaver fund company having different timeframes. You really don’t want to have to push out the settlement date or miss out on being able to use your KiwiSaver funds at all. If the purchase of the property has gone through before the Kiwisaver funds are released to you, you won’t be able to use them.
Other Things to Consider
After the application has been processed and approved, the funds are transferred to your lawyer’s trust account. Your lawyer will then send the money to the property’s vendor on settlement day, which is the day you become owner of the property.
If the purchase falls through, as long as there wasn’t an error made on your part, the funds will need to be returned to your Kiwisaver account. Your lawyer can take care of this.
Kiwisaver withdrawals are not taxed. So the funds, upon withdrawal, are all yours to be used towards your first home deposit.
Compare Home Loans and Talk to an Expert
Here at Money Compare, we are all about helping Kiwis make the best choices possible with their money. Our comparison platform allows you to easily and quickly compare home loans and interest rates, so you can get a better understanding of the market, and make a fully informed decision. We have also partnered with mortgage brokers/ advisors who are on hand to answer any home loan and mortgage questions, and who can help navigate you through the entire process of buying your first home. Simply click the button below, and we can match you with a mortgage broker for free!
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