First Home Buyers - KiwiSaver funds
Wednesday April 3, 2013
KIWISAVER AND FIRST HOME BUYERS
Please note that there has been a change in the criteria relating to the KiwiSaver first home deposit subsidy taking effect from 1 October 2013.
What is KiwiSaver?
KiwiSaver is a voluntary Government initiative designed to help us all save for our retirement.
There are a number of membership benefits, one of which is the ability to withdraw your savings to contribute towards the purchase of your first home.
How much of my KiwiSaver savings can I withdraw?
In most cases you will be able to withdraw all of your KiwiSaver savings (except for the $1,000 kick start and member tax credit) to put towards buying a first home.
Some service providers will not allow you to withdraw your savings for your first home. If you are a member of KiwiSaver and want to use your savings for your first home withdrawal, you will need to check with your service provider to see if they offer this.
How do I qualify for the KiwiSaver savings withdrawal?
You must have been a KiwiSaver member for three or more years. You can only withdraw money to buy your first home, not an investment property.
If you have owned a home before, you may be entitled to withdraw your KiwiSaver savings if Housing New Zealand determines that you are in the same financial position as a first home buyer would be.
How do I apply for the KiwiSaver savings withdrawal?
To withdraw your KiwiSaver savings you must apply to your KiwiSaver provider.
Each KiwiSaver provider has their own set of requirements when it comes to applying for your first home savings withdrawal. Typically they will make you aware of their requirements and send you an application form when you first contact them to enquire about making the withdrawal.
What is the KiwiSaver first home buyer's deposit subsidy?
This is another contribution available to first home buyers who are KiwiSaver members. The deposit subsidy is administered by Housing New Zealand. The subsidy will be paid direct to your solicitor on the day that the purchase of your first home settles.
The first home buyer's deposit subsidy is $1,000 for each year that you have been contributing to KiwiSaver. Note that this differs from the KiwiSaver savings withdrawal where you only need to be a KiwiSaver member for three years. The most you can receive is $5,000 for five years. If you are a couple buying a house together and you both qualify for the deposit subsidy, you could receive a combined subsidy of up to $10,000.
How do I qualify for the first home buyer's deposit subsidy?
You must have been contributing toward a KiwiSaver scheme for three years or more.
You must be buying your first home. If you have owned a home before, in some circumstances you may still be eligible for the first home buyer's deposit subsidy. Housing New Zealand will need to determine that you are in the same financial position as a first home buyer.
You must be planning to live in the house for at least six months. The deposit subsidy is provided as a loan which will then be forgiven if you live in the house for six months. If you move out of the house before the six month period, then you will be require to pay the deposit subsidy back to Housing New Zealand.
Your yearly income must be $80,000 or less (before tax) for one buyer, or combined $120,000 or less (before tax) for two or more buyers.
You must have a 10% deposit to contribute towards the purchase. Your KiwiSaver savings withdrawal and KiwiSaver first home deposit subsidy can be counted towards your 10% deposit.
The purchase price of the property you are purchasing must not exceed the cap for the area in which you are buying. The price cap for the Tauranga area is $350,000. Please contact us to discuss the price cap if you intend to purchase outside of the Tauranga area.
How do I apply for the KiwiSaver first home deposit subsidy?
To apply for the deposit subsidy, you must fill in Housing New Zealand’s pre-approval/application form. You will need to include with your application:
1. proof of earnings;
2. proof of KiwiSaver contributions;
3. identification; and
4. your sale and purchase agreement.
What are the timeframes involved?
You must apply to Housing New Zealand for the KiwiSaver first home deposit subsidy at least 4 weeks prior to the settlement date.
It will take 5 working days to assess an application for the deposit subsidy, provided that all of the supporting documentation required by Housing New Zealand is included with your application. Housing New Zealand will then send legal documents to your solicitor which you will need to sign and return to Housing New Zealand no later than five working days prior to settlement date.
Typically KiwiSaver providers require less time than Housing New Zealand to process your application. Timeframes do vary between KiwiSaver providers and in relation to their current workloads. Ideally you would also apply to your KiwiSaver provider at least 4 weeks prior to the settlement date.
It is recommended that the above timeframes are factored into your agreement for sale and purchase.
How can Holland Beckett help?
We can assist you by ensuring that your agreement allows sufficient timeframes for your applications to be processed. The KiwiSaver first home withdrawal and first home deposit subsidy cannot be paid after settlement, so it important that you allow enough time for your applications to be processed.
We are experienced in working with KiwiSaver providers and Housing New Zealand and can help you ascertain whether you qualify for the KiwiSaver first home buyer schemes and guide you through the application process if you do qualify.
The thresholds and figures referred to above are correct as at 7 October 2013.