Using Your KiwiSaver for Your First Home Purchase
Purchasing your first home is a significant milestone, and for many, KiwiSaver can play a crucial role in making this dream a reality. KiwiSaver, primarily designed as a retirement savings scheme, also offers the opportunity to withdraw funds for buying a first home. This article explores how to effectively use your KiwiSaver for your first home purchase, outlining the eligibility criteria, process, and additional support available.
Understanding KiwiSaver First Home Withdrawal
Eligibility Criteria
To be eligible for a KiwiSaver first home withdrawal, you must meet the following conditions:
- Membership Duration: You must have been a member of KiwiSaver for at least three years.
- First-Time Buyer: You should be purchasing your first home. However, if you’ve previously owned a home, you may still qualify if Kāinga Ora determines you are in a similar financial position to a first-time buyer.
- Intention to Occupy: The home must be intended as your primary residence, not an investment property.
- Minimum Balance: You must leave at least $1,000 in your KiwiSaver account after the withdrawal.
What You Can Withdraw
You can withdraw most of your KiwiSaver savings, including your contributions, your employer’s contributions, government contributions, and any returns on investment. However, you cannot withdraw funds transferred from an Australian complying superannuation scheme.
The Withdrawal Process
Initial Steps
- Contact Your KiwiSaver Provider: Begin by contacting your KiwiSaver provider to discuss your intention to withdraw funds for a home purchase. They will provide you with an estimate of how much you can withdraw and guide you through the process.
- Pre-Approval: Obtain pre-approval from your KiwiSaver provider. While this does not speed up the official application process, it gives you a clear idea of your available funds, which is crucial for budgeting and securing a mortgage.
Application Process
- Conditional Sale and Purchase Agreement: Once you have a conditional agreement for your first home, you can apply for the withdrawal. Note that you cannot use KiwiSaver funds for a deposit on a property being sold at auction[3].
- Complete the Application: Fill out the application form provided by your KiwiSaver provider. This form must be witnessed by a Justice of the Peace or a solicitor.
- Submit Supporting Documents: Attach certified copies of supporting documents, such as proof of identity and the sale and purchase agreement. Your solicitor will also need to provide a letter detailing the agreement and settlement dates.
- Processing Time: Allow at least 10 to 15 working days for your provider to process the application. Ensure that your settlement date is at least two weeks after all conditions of the agreement are satisfied to avoid any delays.
Settlement
On the settlement date, your KiwiSaver provider will transfer the funds directly to your solicitor’s trust account, who will then forward it to the vendor. If the purchase falls through for reasons beyond your control, the funds are typically returned to your KiwiSaver account.
Additional Support: First Home Grant
In addition to KiwiSaver, you may be eligible for the First Home Grant, which provides up to $5,000 for individuals or $10,000 for couples purchasing an existing home, and up to $10,000 for individuals or $20,000 for couples building a new home. To qualify, you must have been contributing to KiwiSaver for at least three years and meet specific income and house price caps.
Tips for Maximising Your KiwiSaver Withdrawal
Review Your Fund Choice
As you approach your home purchase, consider switching to a more conservative KiwiSaver fund to protect against market volatility. This ensures your savings are not significantly impacted by market fluctuations when you need them.
Plan Ahead
Start the withdrawal process early to avoid any last-minute issues. Ensure all documentation is complete and submitted well before your settlement date.
Consult Professionals
Engage with a property lawyer and a financial advisor to guide you through the process. They can provide valuable insights and ensure all legal and financial aspects are handled correctly.
Using your KiwiSaver for a first home purchase can significantly ease the financial burden of buying a home. By understanding the eligibility criteria, following the correct process, and leveraging additional support like the First Home Grant, you can make the most of your KiwiSaver savings. Proper planning and professional guidance will help ensure a smooth and successful home-buying experience.