Although KiwiSaver is intended to help with retirement saving, a growing number of people are taking advantage of the option to withdraw some or all of their savings to help fund the purchase of a first home. And most are surprised at just how much they’ve accumulated in a relatively short space of time. While KiwiSaver can help buy a first home, there are a few conditions and some recent changes you need to know about. We’ve outlined all you need to know about KiwiSaver withdrawals, the HomeStart Grant and changes around “second-chance” homeowners.

Withdrawing savings from KiwiSaver for your first home

If you’ve contributed to KiwiSaver for three or more years, you may be able to withdraw some of your savings from KiwiSaver to put towards your first home deposit or to use towards the purchase price at settlement.

Here’s how to access the savings in your KiwiSaver:

Step 1 – Check that you qualify to make a withdrawal

You may be entitled to withdraw savings from KiwiSaver provided:

• You’ve contributed to KiwiSaver for three or more years.
• You’ve never made a withdrawal from KiwiSaver to purchase home or land before.
• The property you are buying is your main place of residence

• Your member contributions.
• Any employer contributions (voluntary and compulsory).
• Any return on investments received.
• Any member tax credits.

Once you have a conditional sale and purchase agreement for your first home or land, you can apply to withdraw your savings from KiwiSaver. Use these funds to purchase a freehold, leasehold or stratum estate – this could be an existing house, a vacant section on which you plan to build your home, an apartment off plan, or a house and land package.

You’ll need to submit the following to your KiwiSaver provider:

• A copy of the sale and purchase agreement, listing you as the purchaser.
• A completed KiwiSaver Scheme First Home Purchase Withdrawal form.
• A completed solicitor’s or conveyancing practioner’s letter.

Once the withdrawal is approved, the money will be paid directly to your solicitor or conveyancing practitioner to go towards the deposit under your sale and purchase agreement. The balance of the amount withdrawn not used for a deposit will be held by your solicitor or conveyancing practitioner for settlement.

Using your KiwiSaver funds as part of your settlement:

Once withdrawal is approved, the money will be deposited into your solicitor or conveyancing practitioner’s trust account and paid to the vendor on settlement.

KiwiSaver HomeStart grant

The KiwiSaver HomeStart grant helps make buying a first home just a little bit easier. As a first home buyer, you may be eligible to receive the KiwiSaver HomeStart grant, provided you meet the following eligibility criteria:

• You currently don’t own a home or land.
• You have not received the KiwiSaver HomeStart grant or the KiwiSaver deposit before.
• You have contributed towards KiwiSaver for three or more years.
• You earn $80,000 or less as a single buyer or $120,000 combined income for two or more buyers.
• You have a deposit of 10% or more of the purchase price (including any KiwiSaver first home withdrawal savings, the HomeStart grant amount you or the other purchasers may be eligible for, as well as any savings or gifting from a relative).

The grant is paid by the government and administered by Housing New Zealand who determine eligibility.

If you’re buying an existing home, the HomeStart grant is $1,000 for each year you’ve contributed to KiwiSaver, up to a maximum of $5,000.

3 years of contributing = $3,000
4 years of contributing = $4,000
5 years of contributing = $5,000

If you’re buying a new home off plan or land to build a new home on, the HomeStart grant is doubled to $2,000 for each year of contribution to KiwiSaver, up to a maximum of $10,000.

3 years of contributing = $6,000
4 years of contributing = $8,000
5 years of contributing = $10,000

Buying a first home with your partner who may also be eligible for the KiwiSaver HomeStart grant means you could receive up to $20,000.

Second-chance homeowners

Recent changes to KiwiSaver are also helping “second-chance” homeowners. If you’ve previously owned property but have low assets and earnings, you could still be eligible for a KiwiSaver first home withdrawal and the KiwiSaver HomeStart grant.

Before applying to make a KiwiSaver first home withdrawal, you’ll need to contact Housing New Zealand to see if you qualify.

You must meet the following eligibility criteria:

• You have not previously withdrawn savings from KiwiSaver to use towards the purchase of a first home.
• You have contributed to KiwiSaver for three or more years.
• You have previously owned a home, but at the time of your application no longer have an interest in a property.
• You intend to live in the property.
• You have a deposit of at least 10% of the purchase price (this can include KiwiSaver funds).
• Your realisable assets are less than 20% of the house price cap in the area you are buying in.

Get in touch with us

Contact a Mortgage Express adviser if you need any advice on KiwiSaver withdrawals, the HomeStart grant or “second-chance” homeowners.

*House price caps vary by region and are currently:

• Auckland – $550,000
• Hamilton City, Tauranga City, Western Bay of Plenty, Kapiti Coast, Porirua City, Upper Hutt, Hutt City, Wellington City, Nelson City, Tasman, Waimakariri, Christchurch City, Selwyn District, Queenstown Lakes – $450,000
• Rest of New Zealand – $350,000