Shelley Hanna answers your KiwiSaver questions

A dream house in Wellington might be challenging for daughter living in Australia. Photo / NZME

Q My eldest daughter is currently working in Australia.

She is thinking of withdrawing some of her KiwiSaver funds to purchase a house in Wellington together with her brother who works and lives in Wellington.

The house will be her brother's principal place of residence, but unlikely hers in the next two years or so.

Will that impact on their ability/eligibility to get the $5k each First Home Grant — do both of them need to live in the house for at least six months?

If she is able to live in the house within the first year, does the six-month requirement need to be continuous or six months spread over a calendar year?

What would happen if this six-month condition is not met?

A Home ownership is supported by government policy and eligible first- home buyers are permitted to access their KiwiSaver funds, if they have been members for at least three years.

It is certainly possible for two or more people to buy a home together, and if they qualify they can withdraw all but $1000 of their KiwiSaver for this.

However, it must be purchased with the intention of living there, and not as an investment property.

The First Home Grant is separate from the KiwiSaver First Home Withdrawal. The grant is managed by Kāinga Ora. KiwiSaver members are given up to $5000 to buy an existing home or $10,000 for a new build, if they meet all the criteria.

I asked Jason Lovell, Kāinga Ora manager home ownership products, to comment on your daughter's situation and he replied, "All First Home Grant applicants need to be living in New Zealand at the time of application, and be buying a home to live in themselves.

Each recipient of the First Home Grant needs to live in the purchased property for six months from the date of settlement.

The amount of the grant is determined by the number of years the applicant has been contributing to KiwiSaver, and whether the property being purchased is a new build or an existing property.

In the circumstance described, the daughter would not qualify for the First Home Grant as she is living in Australia and would not be living in the purchased property from the settlement date. If the six-month requirement is not met, the grant would need to be repaid in full — however, in this case, as described above, the daughter would not be paid the First Home Grant as she would not qualify for it."

I am afraid this is not good news for your daughter.

Further information on the First Home Grant and other home ownership products administered by Kāinga Ora can be found on their website.

Your daughter should contact her provider for help and advice on buying her first home with KiwiSaver. She may be able to download a copy of the application form — this provides a lot of useful detail.

Well done to all of you for checking up on her situation before any decisions are made.

• •Shelley Hanna is the communications manager with Peak Portfolio Management Ltd which is a Financial Advice Provider licensed by the Financial Markets Authority. Disclosure information is available at www.peak.net.nz or call 06 8703838. The information provided in this article is of a general nature and should not be relied on as a recommendation to invest in a financial product. Send your KiwiSaver questions to shelley.hanna@peak.net.nz