KiwiSaver help to buy a home

QUESTION: My wife and I joined KiwiSaver in 2007. Can we cash up our savings to buy our first home?

ANSWER: Yes you probably will be eligible to withdraw some of your savings, as you have been a member for more than three years. Most if not all KiwiSaver providers will allow their members to make a withdrawal to buy their first home.

Assuming you qualify, you (and your wife) should be able to withdraw all your own contributions and your employer contributions.

However, you can't withdraw any government contributions - that includes the $1000 "kickstart" and the annual member tax credits.

You can continue contributing to your KiwiSaver after you have bought the house, or you can apply for a contributions holiday if money is very tight.

The home you intend purchasing must be for you to live in, it can't be a rental or investment property.

Your KiwiSaver provider will have a First Home Withdrawal Application Form for you to fill out.

The trustee of the scheme will then consider your request.

Don't expect the funds to turn up in your own bank account - they will be paid to your solicitor's trust account to await settlement.

You will need to provide information from your solicitor, including a copy of the sale and purchase agreement and confirmation that the agreement is unconditional.

If for any reason you do not go ahead with the sale the money will need to be returned to your KiwiSaver account.

Involve your solicitor at an early stage, before you sign a sale and purchase agreement.

You may also qualify for the First-Home Deposit Subsidy administered by Housing New Zealand.

This is worth $1000 for each year you have been contributing the minimum percentage or more to KiwiSaver (up to a maximum of $5000 for five years' contributions).

If you live in the house for less than six months you will have to repay the subsidy, otherwise it is yours to keep.

Read the useful booklet from Housing New Zealand entitled Buying Your First-Home with KiwiSaver.

I assume you joined KiwiSaver with the intention of using some of your savings towards your first home, and are invested in a lower risk scheme? I ask because with recent volatility some of the higher risk KiwiSaver funds have fallen 10 per cent or more over the past six months.

All KiwiSaver investors need to take into account both their risk tolerance and their timeframe when choosing what fund is right for them. If you need help, talk to an authorised financial adviser.

Shelley Hanna is an authorised financial adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 8703838. The information contained in this article is of a general nature and is not intended to provide specific or personalised advice. If readers have any KiwiSaver questions they would like answered please go to www.peak.net.nz or email shelley.hanna@peak.net.nz.