KiwiSaver First Home Withdrawal

Interviewer: Liz, for the last couple of years, KiwiSaver has been helping New Zealanders buy their first home. Who is eligible for the KiwiSaver first home withdrawal?

Liz: You need to have been a member of a KiwiSaver scheme or a complying KiwiSaver fund for a minimum of 3 years and you can’t currently own, or have previously owned a property.

[Previous property owners may be eligible for a Second Chance Withdrawal – more on this later]

Interviewer: What’s the difference between the first home withdrawal and the deposit subsidy?

Liz: So the first home withdrawal is part of KiwiSaver. It gives you the option to withdraw funds from your KiwiSaver scheme.

[KiwiSaver First Home Withdrawal: Part of KiwiSaver, apply through your KiwiSaver provider]

You can take everything except the Government money, including any investment returns on your account.

[Excludes Government contributions (the $1,000 kick-start and Member Tax Credits)]    

The KiwiSaver first home deposit subsidy is actually run through Housing New Zealand, and that is up to a maximum of $5,000 per person.

[KiwiSaver First Home Deposit Subsidy: administered by Housing NZ, apply through them]

The KiwiSaver First Home Subsidy has criteria that you must meet to be eligible. For more information, you would need to visit the Housing New Zealand website.

[www.hnzc.co.nz or call Housing New Zealand on 0800 801 6014]

The criteria covers things such as income of the people purchasing the house and also a cap on the purchase price of the property.

Interviewer: Could you potentially get both?

Liz: Yes, you could get both the KiwiSaver first home withdrawal and also the KiwiSaver first home subsidy. It is also possible to get one without the other. For example, you may qualify to get a KiwiSaver first home withdrawal but you may not meet the eligibility criteria for the KiwiSaver first home subsidy. Alternatively, you may decide to only take the KiwiSaver first home subsidy from Housing New Zealand, and you may decide to leave funds in your KiwiSaver account for your retirement.

Interviewer: Could your partner also apply if you were buying a house together?

Liz: Yes, so if you’re buying a house with, say, a partner, it is possible for each person to get funds from their KiwiSaver account.

[For each applicant to be eligible, they must intend to live in the property as their primary place of residence]

Along with that, each person may also be able to get the KiwiSaver first home subsidy.

Interviewer: So let’s talk about dollars, what sort of amounts are people actually being able to use to help buy their first home?

Liz: Some statistical information from the Financial Markets Authority in relation to the 8 largest KiwiSaver providers indicates that, on average, people are able to withdraw just over $9,500 from their KiwiSaver account. And because KiwiSaver has been running for nearly 5 years, currently people can get up to $4,000 from Housing New Zealand, and after the 1^st July people will be able to start getting $5,000 from Housing New Zealand if they’ve been in KiwiSaver for the full 5 years.

[Figures as at June 2012]

If you’re a couple, you could effectively have about $18,000 combined from your KiwiSaver accounts, and another $8,000 from Housing New Zealand.

[The Housing New Zealand First Home Deposit Subsidy is capped at $5,000 per person]

Quite a big benefit for you when you’re buying your first home.

Interviewer: What if you already own a property? Could you use KiwiSaver to help you buy a second home, for example a rental property?

Liz: No, you can’t. So, the criteria for being able to do a first home withdrawal is that you can’t currently own or have previously owned a property. So you can’t use it to go towards a rental property or something.

[To be eligible, you must intend to live in the property as your primary place of residence]

 It is possible in certain circumstances, if you’ve owned a property previously that you may be eligible to do a KiwiSaver first home withdrawal. One example of this would be that you have previously been in a relationship and owned a home together and the relationship has dissolved and you now no longer own that home. You would need to go to Housing New Zealand and get a determination from them that you meet the criteria for a second chance withdrawal.

[Go to www.hnzc.co.nz or call Housing New Zealand on 0800 801 601]

The criteria does mean that you have to be in a similar position to that of a first home buyer. For example, it looks at the assets that you currently have.

One thing to know is that you can only ever do one KiwiSaver first home withdrawal. So if, say in 30 or 40 years’ time, you’re in the position of a second chance home buyer, you won’t be able to do another KiwiSaver first home withdrawal.

Interviewer: What happens to your KiwiSaver account after you make a withdrawal?

Liz: Your KiwiSaver account will remain open, so you will still have the Government money in your KiwiSaver account.

[Government contributions = the $1,000 kick-start and Member Tax Credits]

You can carry on contributing to your KiwiSaver account and, that way, you will continue to grow your savings for your retirement.

To find out more about the application process, see the accompanying video ‘Applying for the KiwiSaver First Home Withdrawal’

Interviewer: Liz, at what stage in the house hunting process should you apply?

Liz: If you are thinking of using your KiwiSaver account for a first home withdrawal, or the KiwiSaver first home subsidy from Housing New Zealand, you should contact your KiwiSaver provider and also Housing New Zealand as soon as you start the process. There is time involved in filling out application forms and cashing up your account.

For a KiwiSaver first home withdrawal, your KiwiSaver provider is only able to make payment to your solicitor after you’ve gone unconditional on the property.

[KiwiSaver First Home Withdrawal: payment can only be made after your offer is unconditional]

So it’s important to note that your KiwiSaver funds can’t really be used as the deposit for your property, because we won’t be able to pay them to you before it’s unconditional.

 [Find out more about the KiwiSaver First Home Deposit Subsidy from Housing New Zealand at www.hnzc.co.nz]

For the KiwiSaver first home subsidy from Housing NZ, it is possible to get a pre-approval letter from Housing New Zealand that you can, say, take to your bank to show that you qualify to receive funds from Housing NZ.

[KiwiSaver First Home Deposit Subsidy: Housing NZ can provide a pre-approval letter]

And most KiwiSaver providers would be able to give you an estimate of how much you can withdraw from your KiwiSaver account.

Interviewer: What sort of documentation do you need?

Liz: So, generally your KiwiSaver provider will have a withdrawal form that you would need to complete, and this needs to be signed and witnessed by a Justice of the Peace or a lawyer.

[1. Withdrawal form (available from your KiwiSaver provider)]

You will also need to get a copy of your Sale and Purchase Agreement, as this shows the settlement date and also the date the sale will go unconditional.

[2. Sale and Purchase Agreement]

Your KiwiSaver provider will also be able to provide you with a solicitor’s letter, which is a template letter that your solicitor needs to complete, and this means that we can then pay the funds to your solicitor after the unconditional date.

[3. Solicitor’s letter (template should be available from your KiwiSaver provider)]

And you will also need to provide a deposit slip for your solicitor’s trust account.

[4. Deposit slip for your solicitor’s trust account]

KiwiSaver First Home Withdrawal: Contact your KiwiSaver provider
KiwiSaver First Home Deposit Subsidy: Contact Housing New Zealand tel: 0800 801 601 www.hnzc.co.nz