Q: We are first-home buyers but have realised we are not auction material. We can't afford a house on auction when the opening bid is more or less over our budget. Our only option is to buy an apartment or townhouse still under construction where prices go up when some are occupied. Can we make a KiwiSaver withdrawal for this?
A: Getting into your first home got a bit easier with some changes to KiwiSaver last month. It's now possible to buy an unbuilt home, opening up the possibility of buying off the plans.
Joe Bishop, head of retail and marketing at Gareth Morgan Investments, explains the fine print: "Before the June 1 changes, KiwiSaver members were only able to access their savings at the point of settlement, which meant it wasn't possible to use the first-home withdrawal as a part of any initial deposit they might need to pay.
"Now members may be able to use the first-home withdrawal option to make deposit payments in certain circumstances, including buying homes off the plans (including apartments) or house-and-land packages, which might suit your particular needs.
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"Various restrictions may mean you will not be able to use your first-home withdrawal for deposit payments in all sale and purchase transactions, such as auctions. Your solicitor or conveyancing practitioner can advise you further about this.
"So long as you meet the criteria for a KiwiSaver first-home withdrawal, including membership of KiwiSaver for three years or more, you will be able to withdraw everything in your account except for the $1000 kick-start, if you received it.
"If you didn't receive the kick-start, you will need to leave $1000 in your account when you make the first-home withdrawal.
"You may also qualify for the KiwiSaver HomeStart grant, which is administered by Housing New Zealand. The KiwiSaver HomeStart grant is more generous for first-home buyers who buy or build new homes. If you choose to buy a new home, a house bought off plans, or land to build a new home on, the grant is $2000 for each year you have contributed to the KiwiSaver scheme, up to a maximum of five years and $10,000.
"If you buy an existing home, the grant is $1000 for each year you have contributed to the KiwiSaver scheme, up to a maximum of five years and $5000," says Bishop.
"In both cases you can only use the money to buy a first home and you must not own any other property," he adds.
HomeStart grants have stricter criteria, including income and house-price caps so check the Housing NZ website for the terms and conditions.