Apr 12, 2017 8:16:31 AM

Should you use your KiwiSaver to fund your first home?

Topics: Kiwisaver, First Home, NZ Finance 0


If you’re like most first home buyers, you already know that saving a deposit is probably the hardest part of buying your first home. Just when you think you’ve got enough of a deposit, house prices increase and you’re back to saving again. That’s why using your KiwiSaver to buy your first home may make good financial sense. To help you consider whether it might be right for you, let’s run some numbers.

First home deposit vs. saving for retirement

A good place to start is Sorted’s KiwiSaver savings calculator [link to: https://www.sorted.org.nz/tools/kiwisaver-savings-calculator]. It lets you plug in your details, like birth date, gender, earnings and life expectancy, and calculate how much you’d have in your KiwiSaver by retirement age.

For example, if you had a balance of $35,000 in your KiwiSaver at age 30, by the time you reach age 65 you would have close to $321,000 in your savings. Withdrawing that $35,000 to buy your first home, would leave you with $227,000 by age 65, but you’d likely be mortgage-free by then.

As well as the KiwiSaver withdrawal, first home buyers have access to the HomeStart Grant, [link to: http://www.mortgage-express.co.nz/blog/using-kiwisaver-to-buy-your-first-home] a government initiative that provides eligible first home buyers with a minimum of $3000 up to a maximum of $5000 per person to use towards a deposit. This can amount to a tidy sum if you’re buying a first home with a partner or family members who are also KiwiSaver members.

Given the NZ Super set up, currently a weekly amount of $390 for individuals and $600 for couples, being mortgage-free by retirement age is undoubtedly a priority. Most people’s mortgage repayments would swallow up that full amount each week.

Accessing your KiwiSaver early on means you have more time to pay off your mortgage before retirement age, while building up your savings in your KiwiSaver. It’s easy to see why using your KiwiSaver to buy your first home is a good idea.

“Babybot” answers your KiwiSaver questions

Finding answers to your questions about KiwiSaver just got a little bit easier with an online “babybot” called “Hey Sorted”. Accessed via Facebook Messenger, “Hey Sorted” answers your questions about KiwiSaver.

And while it’s still in the learning stages, spokesperson for the Commission for Financial Capabilities, Glenn Martin, says the more people who use it, the better it will get.

"Hey Sorted is a babybot, so it's still learning, but we're confident it will be able to answer almost anything you ask it about KiwiSaver," said Glenn Martin, marketing and communications group manager.

As well as running your numbers to get an idea of how big your KiwiSaver balance could be, future developments could see the “babybot” capable of answering questions about personal finance topics.

Have you got any questions for “Hey Sorted”?

Where to from here?

There’s no doubt that using KiwiSaver to fund your first home can be a worthwhile investment, but figuring out where and when to start the process can seem daunting. Talk to a Mortgage Express adviser about the options available to you as a first home buyer.


While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Mortgage Express Limited for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.