An important feature of KiwiSaver is the ability to withdraw your contributions from KiwiSaver to purchase a first home.
Another valuable feature is the ability for some people to receive a First Home Buyers Subsidy from Housing New Zealand. There are a number of rules around this Subsidy, but if you are eligible, it is worth investigating.
Basic Rules to be eligible for the First Home Buyers Subsidy
If you’ve been contributing to a KiwiSaver scheme, complying fund or exempt employer scheme for at least three years, you could be entitled to a First Home Subsidy from HNZC. This amount is paid directly to your solicitor for the purpose of purchasing your first home.
The subsidy is $1,000 for each year you have been contributing to the scheme:
■ Three years of contributing = $3,000 (the minimum available)
■ Four years of contributing = $4,000
■ Five years of contributing = $5,000 (the maximum available).
If you’re buying a house with a partner or spouse and you both individually qualify for a subsidy, you could receive a combined subsidy of up to $10,000.
To qualify for a First Home Subsidy, you must meet all of the following criteria (which may change from time to time):
- You are a member of a KiwiSaver scheme, complying scheme or exempt employer scheme and have contributed at least 3% (this was 2% for the period until 1 April 2013) of your gross salary or income into a KiwiSaver scheme or Complying Superannuation Fund for at least three years;
- This is the first property you are buying and the first time you are making a withdrawal from your KiwiSaver scheme for the purpose of buying a home (note, you could also qualify as a previous home owner – see the blog article about First Home Buyer Withdrawal – KiwiSaver);
- The property you are intending to buy is within the maximum house price caps. Please visit www.hnzc.co.nz for the current house price caps. At the time of writing, these are $400,000 for Wellington City and Auckland City and $300,000 for everywhere else. However, it is possible that these may change in the future - Govt looking into KiwiSaver income thresholds for home-buyers.
- You have a combined yearly income of $100,000 or less (before tax) for one or two buyers, or have a combined yearly income of $140,000 or less (before tax) for three or more buyers;
- If you are buying land, a house must be built within 12 months of purchase. You will need to supply a code compliance certificate to show that this has been done;
- If you are building on land or buying an apartment that is being built, you must show:• 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; and
- The property you are intending to buy must be your principal place of residence for at least six months, andis either: • A fee simple estate • A stratum estate (freehold and leasehold) • Cross-lease (freehold and leasehold) • Leasehold.
How do I apply for a First Home Subsidy?
If you are interested in applying for the First Home Subsidy, visit the HNZC website at www.hnzc.co.nz where you can find
the relevant application forms and information. HNZC will be able to assist you and let you know if you qualify for the subsidy, usually within five working days.
Once approved, you will be sent a confirmation letter by HNZC, which you need to take to your bank and send to your
KiwiSaver provider as it counts towards the total finance available to buy your first home. It’s worth noting that if you decide to apply for the First Home Subsidy, it’s best to start this process early.
HNZC will normally approve your subsidy within four weeks of receiving your application. Once your application has been approved, documents are issued to your solicitor, to be signed by you and your solicitor, and returned to HNZC. The subsidy is paid to your solicitor on the day of settlement and is only paid once.
Thanks to OnePath NZ for this information. You can download the full One Path FirstHomeBuyersGuide here.
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By Carey Church