If you are buying a home using KiwiSaver funds what are the regulations around living in the home for the first six months? What are the requirements and what are the penalties if you choose not to?
It's good to see you're diving into the fine print on KiwiSaver as well as combing through the real estate listings.
So, a quick recap on the basic rules around buying your first home using KiwiSaver because there have been some tweaks in the past month.
Anyone wanting to buy a home using KiwiSaver money needs to have belonged to KiwiSaver for at least three years.
You can't have owned a property before, although there are some exceptions - more on that later.
There are no restrictions around how much you earn or the price of the house you buy to get the KiwiSaver first-home withdrawal.
Since the beginning of April it has been possible to withdraw everything in your KiwiSaver account except for the $1000 kickstart.
Previously any member tax credits you earned also had to stay in your account.
You don't have to take the maximum amount out - if you think you only need part of the funds available then you are able to leave the remainder in your account.
But what about the requirement to live for a set period in your new home? This is definitely worth checking out particularly if you see your circumstances changing in the not too distant future, so I put it to Sarah Whitelock, a principal at KiwiSaver provider Mercer.
"Legislation requires you to intend to live in the home you have purchased for at least six months at the point that you apply and make the statutory declaration which forms part of the application process."
"Legislation requires you to intend to live in the home you have purchased for at least six months at the point that you apply and make the statutory declaration which forms part of the application process," Whitelock says.
"It is silent on the consequences of you reneging on this should your circumstances change once the purchase has been made.
"If at the time of making the statutory declaration you didn't intend living in the house for six months then you may be making a false statutory declaration, which in New Zealand is a criminal offence potentially punishable by fines or imprisonment.
"You may wish to speak to your lawyer about your own personal circumstances," Whitelock says.
As Whitelock says the laws governing KiwiSaver are very clear that the first home withdrawal is to be used for your own home and rule out using the money for an investment property, holiday home or the like.
KiwiSaver providers will get you to sign a document confirming you comply with the rules for a first home withdrawal, including that you intend to live in the home you have purchased.
This will need to be witnessed by a JP, a solicitor, Member of Parliament, court registrar or anyone authorised under New Zealand law to administer an oath or declaration.
A solicitor is likely to be the most convenient option for you as they will be involved in the sale and purchase of your new home.
In fact the funds you withdraw from your KiwiSaver account to put towards your first home will be paid into a solicitor's trust fund around the settlement date rather than be paid directly to you.
If the house sale falls through the solicitor will repay the funds back to your provider, otherwise it will be directed to the purchaser to settle the sale.
For those that have owned a home before but no longer do so, Housing New Zealand will run the ruler over your financial circumstances before recommending whether or not your provider can release your funds.
Basically, Housing New Zealand is looking to see that you are in a similar financial position as someone taking their first step into home ownership and will take into account how much you earn and what savings and assets you have available to pay for a home.
• More information is available on the Housing New Zealand website:
• 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.