Many people want to apply to use their KiwiSaver towards their first house deposit. Rather than waiting all the way till your retirement to be able to withdraw your KiwiSaver, making some form of a withdrawal for your first house can be an appealing idea to many people.
More about KiwiSaver
KiwiSaver is a popular savings scheme, and these days a massive amount of people in New Zealand are a member of KiwiSaver. Given that employers typically need to contribute 3% of someone’s pay towards this, it can be an easy way to quickly build up your house deposit.
KiwiSaver as your house deposit
KiwiSaver can typically be used towards your house deposit. Generally speaking to buy a house, it is preferred that someone has a 20% deposit. However there are circumstances where a 10% or 15% deposit may be okay. Check as to how much your desired house’s price might be, then calculate 10% or 20%. If your KiwiSaver does not reach these amounts, you may need to top it up from your savings.
How much of your KiwiSaver can be used?
There is an array of criteria around this but most people find they can withdraw all their KiwiSaver except for $1,000 and any money earnt from Aussie Super transfers (if any).
How long do you have to be a member of KiwiSaver?
You generally need to be a member of KiwiSaver for 3+ years in order to be able to try withdraw it for your first home purchase.
Can you use KiwiSaver for an investment property?
No, this is prohibited and is against the KiwiSaver rules.
How to find out how much you can withdraw?
You need to contact your KiwiSaver scheme provider. Most people have their KiwiSaver with their bank, whilst others use other providers. Typically you would ask them for a “first home withdrawal quote”. This is a 1-2 page letter or email that can be sent to you that gives an idea of how much you can withdraw for your first home purchase. Note that the amount may fluctuate or be reviewed again more carefully and change in the later or final steps.
How to apply?
The first step is usually to get a copy of your First Home Withdrawal Letter from the KiwiSaver scheme provider. Once you have this, then you can request the scheme provider to provide you with the full first home withdrawal form. You may need the assistance of a solicitor, conveyancer and possibly a mortgage broker around this.
Can you only use your KiwiSaver for your first house?
Most people are using their KiwiSaver for their first house. If you have owned a house before and no longer do, then you may be able to use your KiwiSaver. This is a more complicated process however with stricter criteria.
Is your KiwiSaver provider making it difficult to withdraw your money?
There have been reports that some KiwiSaver providers have made it challenging to withdraw money for your first home purchase. It may be worth talking to the provider to discuss what the issue is and if it can be resolved. However if there is continual difficulty, try discuss the matter with a mortgage broker or financial adviser who is suitably qualified in this regard.
Additional government help
You may want to see if you are possibly eligible for the KiwiSaver HomeStart Grant. This is separate to using your KiwiSaver towards your first home purchase. The Grant can allow you to receive a grant from the government, up to $20,000 per couple, subject to qualifying criteria. The Grant is available to properties only up to a certain value, and has a variety of additional strict criteria, e.g. a maximum amount a person can be earning. The benefit of the Grant is that you do not need to pay it back, e.g. it is a ‘grant’ and not a loan from the government.
For more information, consider speaking to a professional mortgage broker or financial adviser