Helen Twose 's Opinion

Personal finance and KiwiSaver columnist at the NZ Herald

KiwiSaver: Using savings the second time around

4 comments
It’s possible to put KiwiSaver cash towards a house even if you have owned one before, but rules apply.

It pays to get KiwiSaver details sorted out well before settlement day.
It pays to get KiwiSaver details sorted out well before settlement day.

I bought a property in 2007 and I'm now selling it at a $30,000 loss as it is currently untenanted and costing me $2000 a month. It will allow me to move ahead with my life.

I didn't use my KiwiSaver last time and would like to use it now to buy a house with my partner, who did not own part of my previous house.
What are the eligibility criteria for being declared a first home buyer again?

While most people will be squirreling away money into their KiwiSaver for retirement it is possible to dip into your funds to buy your first home.

For your partner, who hasn't owned a home before, the process is a little more straightforward.

If they have been in KiwiSaver for at least three years they can apply to their KiwiSaver provider to withdraw some or all of their KiwiSaver savings (except for the $1000 kick-start and member tax credit) to put towards buying your first home together.

If your partner's KiwiSaver provider approves the withdrawal for a first home the funds will be paid to your solicitor on or before settlement day.

If, for some reason, the house sale falls through that money will need to be repaid back to the KiwiSaver provider.

It would pay for your partner to get in touch with their KiwiSaver provider when you start house hunting together so their provider can give you both an idea of how much money could potentially be available to put towards a house deposit.

Their KiwiSaver provider should also be able to give you a rundown on the documentation you'll need to supply them with, plus an indication of the lead time required to process your application.

All this should hopefully ensure there are no hiccups come settlement day.

Your situation is a little more complicated.

You can also potentially use your KiwiSaver funds but there are a few more hoops to jump through.

Some of the same rules apply - you need to have been a KiwiSaver for at least three years and you can take out only the contributions and investment returns.

It must also be the first time you've used your KiwiSaver funds to buy a house, which isn't an issue for you because you purchased your first property without using that money.

Unlike your partner, who will be talking to their KiwiSaver provider to get access to their funds, you will need to apply to Housing New Zealand.

Housing New Zealand will run the ruler over your application and determine if you are in the same financial position as a first-home buyer.

In a nutshell, those on a lower income with limited assets can get assistance with getting a deposit together - the deposit subsidy - or use KiwiSaver for a home purchase if they've owned a property in the past.

There are also house price caps that apply to both the deposit subsidy and the withdrawal for previous home owners that reflect the price of a modest home in the area.

It ranges from $300,000 for large parts of New Zealand up to $485,000 in Auckland.

I asked Housing New Zealand to go over the application rules:

"Once you have owned a property, but no longer do so, you can apply for the KiwiSaver deposit subsidy and/or savings withdrawal determination as a previous home owner.

"However, until the property is sold and your name has been removed from the certificate of title, you will not be eligible.

"Previous home owners need to complete the same application as first-home buyers applying for the deposit subsidy, but there is an extra section (section E) that is required to be completed.

"If only applying for the determination for the savings withdrawal, previous home owners need to meet the following criteria:

Have realisable assets totalling no more than 20 per cent of the house price cap for the area they are buying in.

Meet the same income cap as those applying for the deposit subsidy - that is, earned income of up to $80,000 for one buyer in the last 12 months, or earned income of up to $120,000 for two or more purchasers."

Click here for further details.

Disclaimer: Information provided is stated accurately to the best of the respondent's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice specific to their situation before making an investment decision.

To have your KiwiSaver questions answered by the Herald's panel of industry players email Helen Twose, helentwose@gmail com. Sorry, but Helen cannot answer all questions, correspond directly with readers, or give financial advice.

- NZ Herald

Helen Twose

Personal finance and KiwiSaver columnist at the NZ Herald

Helen Twose is a freelance business journalist who writes regularly about KiwiSaver and entrepreneurial companies. She has written for the Business Herald since 2006, covering the telecommunications sector, but has more recently focused on personal finance and profiling successful businesses.

Read more by Helen Twose

Have your say

We aim to have healthy debate. But we won't publish comments that abuse others. View commenting guidelines.

1200 characters left

Sort by
  • Oldest

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_n3 at 18 Sep 2014 16:20:28 Processing Time: 604ms