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. Check out our blog articles
Buying your first home with KiwiSaver
Not only does KiwiSaver include a number of benefits designed to help you reach your retirement goals, it also offers two features to help you buy your first home:
■ First Home Withdrawal
■ First Home Subsidy (contact Housing New Zealand Corporation). Both of these options may help you to buy your first home, or the land on which to build your first home. The withdrawal and subsidy may be available to members who have previously owned a home and are in the same financial position as a first home buyer.
First Home Withdrawal
If you have been a KiwiSaver member for three years or more, you may have the option to withdraw a proportion of your KiwiSaver savings to help buy your first home.
The amount you are entitled to withdraw is made up of:
■ Your individual contributions;
■ Any employer contributions; and
■ Any investment returns.
Note, the initial $1,000 Government kick-start contribution and any member tax credits cannot be included in a First Home Withdrawal.
To qualify for a First Home Withdrawal, you must meet all of the following criteria:
■ You have been a member of a KiwiSaver scheme, or a complying superannuation scheme, for at least three years;
■ This is the first withdrawal you are making to buy a home.
■ You have never before owned an estate in land, (note, if you have owned a home previously you may be eligible for a First Home Withdrawal as a previous home owner – see below); and
■ The property is intended to be your principal place of residence (i.e. not bought solely for investment purposes).
First Home Withdrawal criteria for previous home owners
You may qualify for a First Home Withdrawal as a previous home owner, provided you meet the criteria for a First Home Withdrawal as mentioned earlier, plus:
■ You have not received the withdrawal subsidy for the purchase of a property before;
■ Housing New Zealand Corporation (HNZC) is satisfied that your income, assets and liabilities represent a financial position that would be expected of a person who has never owned an estate in land. For further information you should contact HNZC
How do I apply for a FirstHome Withdrawal?
How do I apply?
If you wish to apply for a First Home Withdrawal, you need to contact your KiwiSaver scheme provider to request an application form. If you are a member of the SIL KiwiSaver Scheme, contact OnePath (NZ) Limited (“OnePath”), the Scheme Provider of SIL KiwiSaver Scheme on 0800 737 575 or contact your financial adviser who will help you out. If you are a Moneyworks KiwiSaver client, call us on 0800 225 621 or email us at firstname.lastname@example.org.
You will be asked to provide the following information from your solicitor with your application form:
■ A solicitor’s pre-printed bank deposit slip for their Trust account;
■ A copy of the sale and purchase agreement; and
■ A solicitor’s letter of undertaking that clearly shows you as the purchaser.
Do I need to provide additional information if I ama previous home owner?
If you have previously owned a home, and want to apply for a First Home Withdrawal as a previous home owner, you will
need to obtain approval from HNZC and submit this with your First Home Withdrawal application form (contact HNZC
regarding the approval process for previous home owners).
SIL KiwiSaver Scheme members
If you are a member of the SIL KiwiSaver Scheme, OnePath will send you an application form which includes full instructions and a letter to confirm how much you have available for a First Home Withdrawal (depending on market movement, and any further contributions received from the date of the letter sent to you, the amount for withdrawal may be different from the amount shown in the letter). You can take this letter to your bank as it can be counted towards the total finance available to buy your first home.
How will the funds be paid?
The funds will be paid directly to your solicitor before settlement and are only paid once. The funds must be used towards the purchase of your first home. You are unable to apply for a First Home Withdrawal if you already own a property.
OnePath will process your application within five working days. Therefore, OnePath requires all complete and correct documentation to be received at least five business days prior to your settlement date.
■ Funds are paid directly to your solicitor to be used towards the house you are buying.
■ Funds must be paid prior to your settlement date.
■ If you are a member of the SIL KiwiSaver Scheme and are thinking of applying for a First Home Withdrawal, we recommend that you talk to your Authorised Financial Adviser before looking for your first home.
By starting the process early we can confirm whether you qualify and the approximate amount you can withdraw to put towards your house purchase. You should talk to your bank and HNZC (if applicable) at the same time.
■ As a KiwiSaver member, you can apply for a pre-approval from HNZC but it’s important to remember that the money must only be used for the final purchase of the house and not as a deposit for the house. If you are a member of the SIL KiwiSaver Scheme you may also apply for pre-approval of your KiwiSaver savings.
■ If your pre-approval is granted, then your withdrawal application will be approved subject to OnePath receiving:
• A solicitor’s pre-printed bank deposit slip;
• A copy of the sale and purchase agreement; and
• A solicitor’s letter of undertaking that clearly shows you as the purchaser.
■ Application forms must be fully completed (please note you will need to obtain confirmation from HNZC if you are a previous home owner).
■ If you are a default member and have never provided proof of your identity, you will be required to provide this with your application for a First Home Withdrawal.
■ Not all complying superannuation schemes permit First Home Withdrawal.
■ For the First Home Subsidy, HNZC should be satisfied that your income, assets and liabilities represent a financial position that would be expected of a person who have never owned an estate in land
Thanks to OnePath NZ for this information. You can download the full One Path FirstHomeBuyersGuide here.
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By Carey Church