KiwiSaver and First Home Withdrawals: What You Need to Know
For many aspiring homeowners, KiwiSaver has become an invaluable tool in making the dream of owning a home a reality. The KiwiSaver First Home Withdrawal scheme allows eligible members to use their savings to help fund the purchase of their first home. Understanding the intricacies of this process is crucial for anyone considering this option. Here’s what you need to know.
Eligibility Criteria
To be eligible for a KiwiSaver first home withdrawal, you must have been a member of the KiwiSaver scheme for at least three years. This applies to both KiwiSaver and complying superannuation funds. You must be a first-time home buyer intending to live in the property you purchase. If you have previously owned a home, you may still qualify if Kāinga Ora determines that you are in a similar financial position to a first-time buyer. This involves an assessment of your current financial situation, including assets and previous property ownership.
What You Can Withdraw
Eligible members can withdraw most of their KiwiSaver savings, including personal contributions, employer contributions, government contributions, and any interest earned. However, at least $1,000 must remain in your KiwiSaver account. Additionally, any funds transferred from an Australian complying superannuation scheme are not eligible for withdrawal.
Restrictions and Conditions
The funds withdrawn must be used for purchasing a home or land in the country, and the property must be intended as your primary residence. The withdrawal cannot be used to buy an investment property. If you plan to build a home, the withdrawal can only be used to purchase the land, not for construction costs on land you already own.
Application Process
The first step in the withdrawal process is to contact your KiwiSaver provider to confirm your eligibility and obtain an estimate of how much you can withdraw. This estimate is essential if you need conditional approval for a home loan. Once you have a conditional sale and purchase agreement, you can apply to withdraw the funds for the deposit. It’s important to note that the withdrawal cannot be made after the property purchase has settled, so timing is crucial.
For previous homeowners, an additional step involves applying to Kāinga Ora for a determination of eligibility. This process can take a minimum of 20 working days, so it’s advisable to start early. Once approved, you’ll need to provide the determination letter to your KiwiSaver provider to proceed with the withdrawal.
Additional Considerations
When planning a KiwiSaver first home withdrawal, it’s important to be aware of the timing and documentation requirements. The process can take time, and each KiwiSaver provider may have different procedures and timelines. Therefore, submitting your application well in advance of the settlement date is essential to avoid any delays that could jeopardise your property purchase.
The KiwiSaver First Home Withdrawal scheme offers a valuable opportunity for first-time home buyers to leverage their savings towards purchasing a home. By understanding the eligibility criteria, withdrawal limits, and application process, you can make informed decisions and navigate the process smoothly. Engaging with your KiwiSaver provider and Kāinga Ora early in your home-buying journey can help ensure that you maximise the benefits of this scheme and achieve your homeownership goals.