Q. In July this year my partner and I entered into an unconditional agreement to buy a first home and land off the plans. Our combined income is well under the HomeStart Grant cap and we intend to use this as well as our KiwiSaver money and bank finance for the first major progress payment when we take title.
However, that first payment has been moved from December until at least March because of circumstances outside the builder's control. By March our combined income will be over $120,000 if we accept the pay rises we have recently been offered.
Can we still get the HomeStart grant in March (or whenever payment is due) or would we be better not accepting pay rises until we have drawn down the grant? Does our combined income need to be under the cap until the house is built?
A. The HomeStart grant is a boon for anyone on a modest income, particularly those looking to build or buy a new home.
All first-home buyers can dip into KiwiSaver after three years and the HomeStart grant provides a boost to those earning under $80,000, or $120,000 for a couple like you.
Changes brought in this year mean it can be worth up to $20,000 for a couple building a new home.
The grant is run by Housing New Zealand. It says HomeStart grants are assessed on the information provided at application time.
"Therefore, if applicants receive a salary increase that would take them over the cap after the grants have been approved, it would have no effect on the HomeStart grants paid."
Housing New Zealand says if the grant is approved - and the funds paid and held in a trust account for when the build is completed - it would not re-assess the applications between grant payment and property completion.
"Therefore, if they applied for grants now (and before March 2016) and were deemed to be eligible, the approvals are completed on the basis of the supporting documents supplied with the applications.
"Given that they are looking at buying a home off the plans, and on the proviso that they meet the eligibility criteria, we could arrange to make the grant payments soon after they have signed and returned the legal documents required, where the funds are held in trust until the property is completed.
"If they were then to receive a salary increase in March 2016, it would have no effect on the HomeStart grants already paid," says HNZ.
More strings are attached to HomeStart grants than to a standard KiwiSaver withdrawal so check the Housing New Zealand website for up-to-date criteria at: hnzc.co.nz/buying-a-house/KiwiSaver-helping-you-into-home-ownership/kiwisaver-homestart-grant
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 NZ Herald's panel of industry players, email Helen Twose.
Helen cannot answer all questions, correspond directly with readers, or give financial advice.