KiwiSaver can help you buy a home faster. With the help of a lawyer and your KiwiSaver provider, and subject to a few conditions, you can use the balance in your KiwiSaver account towards the purchase of your first home.
What is KiwiSaver?
KiwiSaver refers to the management investment schemes governed by the KiwiSaver Act 2006 (Act). The New Zealand Parliament enacted the Act to, per section 3(1):
encourage a long-term savings habit and asset accumulation by individuals who are not in a position to enjoy standards of living in retirement similar to those in pre-retirement. The Act aims to increase individuals’ well-being and financial independence, particularly in retirement, and to provide retirement benefits.
KiwiSaver is mainly about saving and investing for New Zealanders’ retirement, through a combination of personal, employer, and Government contributions to their KiwiSaver schemes.
What is the first home withdrawal?
Access to KiwiSaver funds before the retirement age of 65 is only allowed in a few circumstances. One is to facilitate the purchase of first homes. Such withdrawals are governed by clause 8 of schedule 1 of the Act – a term implied into all KiwiSaver schemes.
Who is eligible?
You can apply for a first home withdrawal if you:
- have not made a first home withdrawal before;
- have been a KiwiSaver member (or a member of complying superannuation funds) for at least three years;
- are buying an estate in land located in New Zealand or an interest in a dwellinghouse on Māori land;
- intend to use the land or dwellinghouse as your principal place of residence, or as the principal place of residence for you and your family; and
- have not owned an estate in land before, ignoring land as held as bare trustee, leasehold estates, interests in Māori land, and beneficial interests in trust property you have no reasonable expectation to occupy; or
- are a qualifying person who is determined by Kāinga Ora to be in the same financial position as a first home buyer.
How much can be withdrawn?
You can withdraw your full KiwiSaver balance, except:
- $1,000, which must remain in the scheme; and
- any funds transferred from an Australian complying superannuation scheme.
How do I apply for a withdrawal?
Every KiwiSaver provider has its own form of application for a first home withdrawal. Most forms can be access online via the provider’s website.
To ensure there are no issues with your application, you might consider applying for pre-approval.
How are the funds paid?
First home buyer KiwiSaver withdrawals must be paid to the member’s lawyer. Before making such payment, the KiwiSaver provider will insist on receiving the following:
- A copy of the sale and purchase agreement showing the member as a purchaser.
- For an interest in a dwellinghouse on Māori land, evidence of the member’s right to occupy the Māori land.
- Specific undertakings from the member’s lawyer regarding the use of the withdrawn funds. The undertakings require the funds to be applied towards the purchase and returned if the purchase does not go ahead.
How long does it take?
Depending on the provider, and if pre-approval has been obtained, it can take up to 15 working days to process your application for a first home withdrawal. Check with your provider to find their turnaround times.
When considering timing, you should also factor in the time required for your lawyer to provide the necessary undertakings. This could take 2-3 working days, depending on your lawyer’s availability.
You can find more information at the following links:
We can help you access your KiwiSaver to part fund the purchase of your first house. Contact us to find out more.