KiwiSaver changes open doors for buyer

Living in Hamilton has just got more affordable.

Q. Here is the puzzle. A new build in Hamilton costs $400,000, for an average home in a not-so-desirable suburb. The HomeStart price cap for Hamilton is $350,000. Does this mean that the proposedHomeStart grant of $10,000 is not able to be used in the mighty Tron?

A. This question from Hamilton hit my inbox a month or so ago but my tardy response has played in your favour. Here's why: April heralded a few changes to KiwiSaver for first-home buyers and, on the whole, it's good news.

Since that date, it has been possible to put any member tax credits you may have earned towards a first home. Previously, the member tax credits couldn't be withdrawn, so this has given home buyers an extra boost towards getting their first property.

Anyone in KiwiSaver for three years can now take out everything in their account, except the final $1000, to buy a first home.

Your KiwiSaver provider will step you through the first-home withdrawal process.

If you are on a modest income — under $80,000 or $120,000 for a couple — further help is available from Housing New Zealand in the form of the KiwiSaver HomeStart grant.

Once you have been making regular contributions for at least three years you may be eligible. You could get $1000 a year up to $5000, or $2000 a year up to $10,000 for a new build.

There are a few strings attached to the HomeStart grant including, as you point out, a price cap.

Those have also been tweaked and here's what Housing New Zealand had to say: "The house price cap for qualifying for the Kiwisaver deposit subsidy in Hamilton was $350,000.

"However, when KiwiSaver HomeStart launched on April 1, 2015, the house price cap for Hamilton City (as defined by the local territorial authority boundary) increased to $450,000.

"Therefore, a new build property in the city costing $400,000 will be eligible for the larger subsidy amount of between $6000 and $10,000 depending on the period of time you have contributed towards KiwiSaver at the required minimum percentage of your income.

"To qualify for a $10,000 grant you need to have been contributing to KiwiSaver for at least five years at the minimum percentage of your income.

"However, if you have been contributing for a minimum of three years or for at least four years, the grant could be either $6000 or $8000," says Housing New Zealand.

A quick search of real estate listings in Hamilton showed there were 291 homes across the city with a sticker price under $400,000, mostly three-bedroom properties.

As you say, there are also new builds available at that price point.

Other changes that came into effect in April included opening up KiwiSaver money for a deposit on a property bought off the plans.

This may also help you get into a brand new home.