Q. My wife and I joined KiwiSaver when we moved here from the UK nearly three years ago. We are both in our early 40s. We owned property in the UK but it was sold when we moved and we are currently renting. We would like to access our KiwiSaver to buy a home for our growing family. This will be our first home in New Zealand. Are we eligible? What is the best way to go about this?
A. Once KiwiSaver members have been contributing to KiwiSaver for at least three years, they can apply not only for a First Home Withdrawal (to get some of your own money out of KiwiSaver) but also for the First Home Deposit Subsidy (additional money from the government through Housing New Zealand).
In order to withdraw KiwiSaver funds in a First Home Withdrawal, you need to sign a declaration that you have never previously owned a property, either alone or jointly with another person. You and your wife have owned property before so you are not First Home buyers. However, someone who has owned a home before can apply to Housing New Zealand (HCNZ) as a "second chance" home buyer if you believe your income, assets and liabilities are similar to someone who has never owned a property before.
The income and asset limits for "second chance" KiwiSaver withdrawals are the same as for the First Home Deposit Subsidy. The income limit is $80,000 per annum (or a total of $120,000 per annum for two or more people). You cannot have "realisable assets" totalling more than 20 per cent of the house price cap in your area. What is our price cap here in Hawke's Bay? This could be a stumbling block for you, as it is just $300,000. Areas such as Auckland, Wellington and Tauranga have higher price caps, but Hawke's Bay at $300,000 is in the bottom tier.
If you think you may qualify and can find something suitable within the $300k limit, you will need to complete HCNZ's 12 page pre-approval form. The sooner you get hold of this form, the better (it is available on their website), as it spells out quite clearly the criteria for the "second chance" and First Home Deposit Subsidy.
If your "second chance" KiwiSaver withdrawal application is successful, HCNZ will provide you with a letter for your fund manager. You will then need to fill out your fund manager's KiwiSaver First Home Withdrawal application form, enclosing this letter.
The maximum available is your own and your employer contributions.
The Government "kickstart" and MTC top-ups cannot be withdrawn for a First Home Withdrawal.
If you meet the criteria for the "second chance" withdrawal, you may also qualify for the First Home Deposit Subsidy.
The First Home Deposit Subsidy is separate from the First Home Withdrawal and does not have to be paid back, as long as you plan to live in the house for at least six months.
Apart from the income, asset and price cap limits, the additional requirement is that you have been contributing at least the minimum percentage of your total income to a KiwiSaver scheme for at least three years (to get $3000) or up to five years (to get $5000). This subsidy is available to each person buying the property, so if two or more people have been contributing the required amount to their KiwiSaver for five years they could get $5000 each.
While this sounds very attractive, it takes careful advance planning to make sure that you contribute the minimum amount each year for up to five years, and apply for the Deposit Subsidy before your combined income goes over the maximum threshold.
The place for you to start is Housing New Zealand's website "Buying a home with KiwiSaver".
This will provide you with all the information you need to help you decide if this is a path you want to follow, or if your KiwiSaver is best left for your retirement.
Shelley Hanna is an authorised financial adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 870 3838. The information contained in this article is of a general nature and is not personalised.
Send your KiwiSaver questions to firstname.lastname@example.org.