Advice matters
KiwiSaver and your first home

Are you looking at withdrawing some of your KiwiSaver money to boost your first-home deposit? And what about getting a KiwiSaver first-home grant?

The retirement savings scheme has been helping many New Zealanders get on that first rung of the property ladder. But before you decide to use this opportunity, here are some key things to know, according to our SHARE advisers.

Eligibility criteria for first-home withdrawals

To be eligible for a first-home withdrawal:

  • You must have been a KiwiSaver member for at least three years.
  • You must be a first-time property or land owner although previous owners who have not had the withdrawal can also apply, as long as they prove that they’re in the same financial position as a first-home buyer (click here to learn more).
  • You must intend to live in the home or on the land you’re buying.
  • You can only ever have one KiwiSaver first-home withdrawal
  • You cannot buy an investment property.

If you meet these criteria, you can withdraw most of your KiwiSaver funds, except for $1,000 and any amount you may have transferred to New Zealand from an Australian superannuation scheme.

Are there any cons to withdrawing?

The pros of withdrawing are easy to see: you can boost your first-home deposit and maximise your property opportunities. However, it’s also important to understand that this would reduce your retirement savings amount.

It’s a delicate balancing act. On the one hand, owning a home in retirement will give you the flexibility to sell and downsize – plus you won’t have to pay rent. On the other, being able to draw a retirement income from KiwiSaver means you may not have to downsize at all, if you don’t want to.

Whatever your plans are, after buying your home, make sure you review your financial life with two priorities in mind: paying your mortgage faster and saving for retirement.

Ready to withdraw? Time is of the essence

The withdrawal process is not immediate, so make sure you file your application at the very least 15 business days ahead of time.

You can apply as soon as you have a conditional sale and purchase agreement.

Keep in mind that, if the funds don’t arrive from the KiwiSaver provider in time for settlement, they cannot be used towards the purchase. This leaves you with a few options, like having to delay the settlement and pay daily penalty interest, or covering the shortfall in price somehow. If you default on the contract and end up not buying the house, you may have to compensate the seller.

To avoid delays, we recommend getting pre-approval from your KiwiSaver provider and submitting your KiwiSaver withdrawal application as soon as possible.

What to know if you’re buying by auction

If you’re buying a property at auction, you can’t withdraw the funds in advance. However, you can use your KiwiSaver funds for the deposit post-auction: to allow this, you need to ask the real estate agent to seek a variation to the auction conditions. You also have to provide a written confirmation from your KiwiSaver provider of the balance of funds eligible for withdrawal and an estimated processing time.

What about first-home grants?

If you’re looking at buying property for the first time, First Home grants are another great KiwiSaver benefit. There’s really no drawback to this. To be eligible:

  • You must have contributed the minimum amount to your KiwiSaver plan for at least three years.
  • The house you intend to buy must be below certain house price caps, which vary depending on the region and whether it’s a new build, an existing property, or land (click here to learn more).
  • You must earn less than the income caps that apply for eligibility.

If you’re eligible, you can get $1000 for every year of membership up to $5,000 for an existing property, or $2000 for every year of membership up to $10,000 for a new home or land. What’s more, if you buy with another person, you can join forces and get up to $10,000 for an existing property, or up to $20,000 for a new build or land .

We’re here to help

Need help with navigating the KiwiSaver withdrawal process? Please don’t hesitate to contact us. Our SHARE advisers have been assisting thousands of Kiwis with their KiwiSaver and mortgage needs.

Like to talk about it? Click here to find a SHARE adviser near you.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.