Shelley Hanna answers your KiwiSaver questions

If this is a first home purchase for both of you then get in touch with your KiwiSaver scheme provider directly. Photo / 123rf

Q My partner and I have been in KiwiSaver since 2010, we are in our early 40s. We work in hospitality and have moved a few times between Queenstown and Wellington, so it has suited us to rent rather than buy. But we are more settled now and we think it's time we bought our own home. How much can we withdraw — just our contributions — or more? What about investment gains?

A Anyone who has not owned a home before and has been in KiwiSaver for at least three years can apply to withdraw all but $1000 of their savings to buy their first home. The home must be your principal place of residence. If this is the situation for both of you, then you should apply directly to your scheme provider.

You may also qualify for the First Home Grant, managed by Kāinga Ora. This grant gives eligible buyers up to $5000 each towards their first home (or second home if they qualify) and up to $10,000 each for a new build. The money does not have to be paid back as long as you live in the house for at least six months. You can seek 'pre approval' for the grant before you start looking for a house. The application requires evidence of income and your level of KiwiSaver contributions over the years. In the 12 months before you apply, you must have earned $150,000 or less before tax for two or more buyers (or an individual buyer with one or more dependents) or $95,000 or less for an individual buyer.

Allow plenty of time to gather and submit the information to Kāinga Ora. You must also be buying within the price cap for your area. The limits were raised substantially on May 19, 2022. The price cap for existing houses in the Wellington region is now $750,000 and $875,000 in Queenstown. Go to the Kāinga Ora website for price caps in other areas or for new builds.

A First Home withdrawal becomes more complicated if either of you has previously owned a house. A person in this situation will initially need to complete a KiwiSaver withdrawal determination form with Kāinga Ora (formerly Housing New Zealand). Criteria are similar to the First Home Grant, for example that you are buying within the price cap for your area.

If this is a first home purchase for both of you then get in touch with your KiwiSaver scheme provider directly. $1000 must be left in your account (this will be the Government 'kickstart' or equivalent for those who did not receive it). You do not have to withdraw the maximum amount from your KiwiSaver, but you only get one opportunity to make this withdrawal.

You may be better off getting out as much as possible, and then increasing your KiwiSaver contributions to build up your balance again. A mortgage broker can help you work out how much you can afford to borrow — and what your budget will look like if for example one of you loses your job or interest rates continue to rise.

Once you have found a house that you both like, let everyone involved in the process know that you are relying on KiwiSaver for the purchase, particularly your solicitor and your real estate agent. Don't sign an unconditional sale and purchase agreement without taking legal advice. This may be the biggest purchase of your life, and you want it to go as smoothly as possible.

• •Shelley Hanna is the communications manager with Peak Portfolio Management Ltd which is a Financial Advice Provider licensed by the Financial Markets Authority. Disclosure information is available at www.peak.net.nz or call 06 8703838. The information provided in this article is of a general nature and should not be relied on as a recommendation to invest in a financial product. Send your KiwiSaver questions to shelley.hanna@peak.net.nz