New Zealand: KiwiSaver and buying your first home

KiwiSaver may be able to help you with buying your first home or with the overall deposit when buying land to build a house on. The two KiwiSaver features that are available are the First-Home Savings Withdrawal from your KiwiSaver provider and the First Home Deposit Subsidy from Housing New Zealand.

KiwiSaver First-Home Savings Withdrawal – Scheme Provider

If you have been in KiwiSaver, a complying fund or exempt employer scheme for three years or more, you may be eligible to withdraw all or part of your savings from your scheme to buy your first home. The amount you can withdraw will be determined by your scheme provider. Not all complying funds allow withdrawals for this purpose and you will need to check this with your scheme provider.

Members are only allowed to withdraw all or part of their own savings in KiwiSaver. The government contributions (including your $1,000.00 kickstart and/or member tax credits) will not be paid out.

As a previous home owner you may be eligible for a savings withdrawal. You first need Housing New Zealand to determine whether you are eligible, and if you are, you can then apply to your scheme provider. There is a list of criteria so that you check your eligibility on the Inland Revenue and Housing New Zealand websites.

Each scheme has a time frame that you must allow for the provider to process the First Home Savings Withdrawal application, and if approved, a time frame to provide the funds to your solicitor for your settlement.

If entering into a Sale and Purchase Agreement please ensure that you allow enough time for your application to be processed before confirming finance (if the KiwiSaver First Home Savings Withdrawal is required for you to purchase the home). You will also need to allow enough time between confirmation of the conditions of the Sale and Purchase Agreement and settlement for the documentation to be completed, sent to the provider, and for the provider to process the payment to your solicitor by settlement date. We recommend you check the time frames with your provider and get advice from your solicitor before entering into a Sale and Purchase Agreement.

KiwiSaver First Home Deposit Subsidy – Housing New Zealand

If you belong to KiwiSaver and have regularly contributed the minimum percentage of your income for a minimum of three years to a KiwiSaver scheme, complying fund or exempt employer scheme you may be eligible for a deposit subsidy from Housing New Zealand of $1,000.00 for each year you have contributed to your KiwiSaver scheme.

If you have been contributing to the scheme for at least three years you may be eligible for a first home deposit subsidy of $3,000.00. The maximum amount available from Housing New Zealand is $5,000.00 after five years of contributing to your KiwiSaver scheme.

The criteria listed for eligibility for the first home deposit subsidy is on the Housing New Zealand website and includes minimum age, contributions, income, deposit, types of property you can purchase and regional house price caps that are eligible under the subsidy.

The subsidy is available for purchasing a current home or the purchase of land which you intend to build on within twelve months. The deposit subsidy is not available to buy an investment property. You must also have a pre-approval letter or certificate from your lender showing the maximum amount you are eligible to borrow.

If you have been a previous home owner, but your financial position is similar to that of a first home owner and you meet the general criteria, you may also be eligible for the subsidy. The assets caps for each region, list of realisable assets and details of the general criteria required to be eligible for the subsidy are listed on the Housing New Zealand website.

The deposit subsidy is only available once, and the subsidy is paid directly to your solicitor, on settlement day. Housing New Zealand will not pay the subsidy out after the settlement date.

A pre-approval for the deposit subsidy can be applied for before you find a house and is valid for 180 days. The pre-approval cannot be extended. If the pre-approval expires before you buy a house, you will need to make a new application. We recommend you apply for a pre-approval before you enter into a Sale and Purchase Agreement, so that you know if you are eligible for the subsidy, and the amount available to you.

If you have obtained pre-approval from Housing New Zealand and you have found a house, you need to send to Housing New Zealand a copy of the signed Sale and Purchase Agreement and evidence of your deposit, no later than ten working days before settlement.

You can buy a house with other people who are not eligible for this subsidy.

To keep the first home deposit subsidy provided by Housing New Zealand, you need to live in the house for six months or more, and if buying land, the house must be built and a Code Compliance Certificate issued within twelve months of purchase of the land. If you do not comply with these requirements then you will be required to pay the subsidy back to Housing New Zealand.

It is important to note the time frames required by Housing New Zealand before entering into an Agreement for Sale and Purchase.

If you have not applied for the First Home Deposit Subsidy and are entering into an Agreement for Sale and Purchase, you need to ensure that you have at least twenty working days to apply for the First Home Deposit Subsidy, receive approval from Housing New Zealand, and if approved for the funds to be paid to your solicitor by settlement date.

If you have already applied to Housing New Zealand for the First Home Deposit Subsidy and have been approved, you will need to ensure that there is at least ten working days between confirmation of the conditions of the Sale and Purchase Agreement and settlement to get the documents required completed and back to Housing New Zealand, and time for the funds to be paid to your solicitor by settlement date.

If eligible, we recommend you apply for both schemes as early as possible, so that you have an indication of the funds that will be available to you to put towards your house purchase, and to ensure the funds that you are eligible for are available on settlement date.

If you are borrowing further funds from a bank or lending institution, they may require information as to whether you are eligible for either or both schemes, and the amount you are eligible for, before approving finance.

There are also other schemes available which you may be eligible for, such as a low deposit loan through the Welcome Home Loan scheme or the Kainga Whenua loan scheme for those wishing to build a home on multiple-owned Maori land. Housing New Zealand have details of the requirements for these schemes on their website.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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