Buying your first home with KiwiSaver

Jul 10

KiwiSaver is a voluntary, work-based savings initiative to help you with your long-term saving for retirement. It has a range of membership benefits including contributions from your employer and the Government, as well as help buying your first home.

KiwiSaver has two features to help you buy your first home or land to build on. The KiwiSaver First Home Deposit Subsidy, and the KiwiSaver First Home Withdrawal. Both of these features can also be used to help buy land to then build a house on, or buy an apartment that is being built. These will be available after 1 July 2010.

Housing New Zealand administers the deposit subsidy and your scheme provider administers the savings withdrawal.

KiwiSaver First Home Withdrawal

After three years membership of a KiwiSaver scheme, or complying scheme you may be able to withdraw all, or part, of your savings (but not the government contributions) to put towards buying your first home. As a first home buyer, please contact your KiwiSaver or qualifying scheme provider to apply.

KiwiSaver First Home Deposit Subsidy

You can apply for the first home deposit subsidy if you have belonged and contributed to a KiwiSaver scheme, complying scheme or exempt employer scheme for at least three years.

The subsidy is $1,000 for each year of contribution to the scheme, up to a maximum of $5,000, after you have contributed for five years.

You can buy a property with other people in which case you may all qualify for a deposit subsidy.

You may only receive the deposit subsidy once.

Eligibility criteria

To be eligible for the deposit subsidy, you must:

• be 18 years or over
• have not received a deposit subsidy before
• be a member of a KiwiSaver scheme, complying scheme or exempt employer scheme.
• have contributed at least the minimum percentage of your income to a KiwiSaver scheme, complying scheme or exempt employer scheme for at least three years (does not need to be consecutive). From 1 July 2007 to 31 March 2009 the minimum contribution was 4 percent of income. From 1 April 2009, the minimum contribution was reduced to 2 percent
• have a combined yearly income of $100,000 or less (before tax) for one or two buyers
• have a combined yearly income of $140,000 or less (before tax) for three or more buyers
• be buying one of the following types of property and land arrangements: (for more information on these property types — see our FAQs or talk to your lawyer)
  • Fee Simple
  • Stratum estate freehold and leasehold
  • Cross-lease (freehold and leasehold)
  • Leasehold

If you are buying a house, you also need to meet the following criteria:

• be buying your first home. You must not currently own any other property
• be buying a house within the maximum house price caps. The house price caps are $400,000 for Auckland City, North Shore City, Rodney District, Wellington City and Queenstown Lakes District and $300,000 for all other areas. Manukau City, Waitakere City, Franklin District and Papakura District are considered ‘other areas’. The new Auckland boundaries and new Auckland Council does not take effect until 1 November 2010. The house price caps will be reviewed then.
• be planning to live in the house.

If you are buying land and planning to build a house on it, or buying an apartment that is being built, you also need to meet the following criteria:

• be planning to live in the house or apartment
• have a house built within 12 months of purchase of the land. You will need to supply a Code Compliance Certificate to show that this has been done
• be able to show, if you are building on land or buying an apartment that is being built that:
  • you will have funding for the construction of the building
  • the total cost of both the land and the house or apartment is within the house price caps
  • the land or site is ready to build on

Previous home owners

If you have previously owned a home or land, but no longer have a share in a property, you may still be eligible for the first home deposit subsidy and savings withdrawal. If you are a previous home owner, read our information on buying a house with KiwiSaver as a previous home owner.

Pre-approval

Apply for pre-approval if you are considering using the first home deposit subsidy to buy a house or land to build on and want to confirm your eligibility before you start house hunting. Housing New Zealand will confirm whether your application is successful. Simply complete the application form, ticking the pre-approval option. Then return with the required documents (see our FAQs for these documents) and we will check your eligibility.

How to apply

There are two ways to apply, depending on your circumstances. Apply for a pre-approval if you have not found a house or land or  build on, but want to find out if you are eligible before you start house/land hunting. Skip that process and apply for the first home deposit subsidy directly if you already have found a house/land, and have a sale and purchase agreement.  Note, you cannot apply for a pre-approval or approval until 1 July.

To apply for the first home withdrawal, contact your KiwiSaver scheme provider, or complying fund provider.

If you have any questions please call us free on 0508 935 266

For more details read our frequency asked questions on KiwiSaver.

Courtesy of Housing New Zealand Corporation www.hnzc.co.nz