KiwiSaver: Help for your dream new home

It is now possible to use KiwiSaver to buy off the plans - but check the rules first. Photo / iStock

Q: Is buying a first home off a plan and putting a 10 per cent deposit on it considered an estate in land under the KiwiSaver rules? Our bank's initial pre-approval is based on our being able to make a KiwiSaver first-home withdrawal but we are now very worried about whether we are eligible. Is there a price cap?

A: If you have an agreement showing you are buying an "estate in land", and you meet the eligibility requirements for a first-home purchase, you can access your KiwiSaver funds.

Previously, you could only use your KiwiSaver funds for payment on settlement of a first-home purchase.

"Changes to the first-home purchase rules on June 1 have made it possible to now make deposit payments in certain situations, including buying a home [or apartment] off the plans," says Nigel Jackson, Westpac's head of investment products.

"Deposits at auctions can be an issue, so check with your lawyer or KiwiSaver provider first."

You must have been a KiwiSaver member for three years or more, not previously made a first-home withdrawal and intend the property to be your principal place of residence.

With exceptions, you can't have already owned an estate in land and must leave at least $1000 in your account after the first-home purchase withdrawal. None of your withdrawal can come from an Australian superannuation scheme.

"There is no price cap on the purchase price of the property when making a KiwiSaver first-home withdrawal," says Jackson.

Price caps apply to this year's new HomeStart grant, which replaces the First Home Deposit Subsidy. It has boosted the money available to those on modest incomes wanting to buy a new home.

If you meet the eligibility criteria, including salary caps and home-purchase price caps, an additional $3,000-$20,000 is available to buy a first home on top of what is available to withdraw from your KiwiSaver funds.

A person buying a newly built first home gets twice as much - up to the $20,000 maximum for a couple - as those buying an existing home.

Before buying a home you'll need to talk to Housing New Zealand, which manages the scheme, as well as your KiwiSaver provider.