Home buyers heeding the Prime Minister’s advice to consider an apartment can qualify to use KiwiSaver funds

Q: Just a quick question - I haven't had much luck on the internet so I thought I would try asking you. To be eligible to use my KiwiSaver funds to buy my first home, does it have to be a house or can I choose to buy an apartment instead?


For a lot of people, KiwiSaver is about squirrelling away some money for retirement, but some, like you, will be looking to put some of those savings towards a first home.

With the Prime Minister last month urging first-home buyers to consider buying an apartment, I asked BNZ's head of wealth and private banking Donna Nicolof if there were any restrictions on buying an apartment with your KiwiSaver money.

"There are no conditions as to the type of property you can buy when making a first-home withdrawal from your KiwiSaver account.

"The property just needs to be your first home.


"There are certain conditions that apply if you want to request a first-home withdrawal from your KiwiSaver account and you have previously owned a property and these are set out on the Housing New Zealand website," Nicolof says.

Any first-home buyer can access part of their KiwiSaver funds after they've been in the scheme for three years.

You're able to withdraw your contributions, the money your employer has chipped in and any investment earnings you've received.

The $1000 kickstart, any member tax credits you've been paid plus any superannuation funds transferred from Australia can't be touched for a first-home purchase.

Your KiwiSaver money must be put towards buying your own home, which could be land to build a home on, but not an investment property or a holiday home.

To access your KiwiSaver money, get in touch with your provider, preferably when you begin house-hunting rather than as you're about to sign on the dotted line on a house purchase because it can't pay out any funds after settlement day.

While you're checking in with your KiwiSaver provider, it might also pay to talk to your bank about your plan to buy an apartment rather than a house, particularly if it's on the small side.

It's generally understood banks will expect a bigger share of the sale price as a deposit on a small apartment, although Bankers' Association chief executive Kirk Hope told the Herald last month that size was just one of the factors banks would consider when looking to lend.


"When lending on small apartments, the bank needs to consider if it will get its money back in case of default. It may not where demand for very small residences is limited," Hope said.

"Other factors banks take into account include the buyer's equity and ability to service the loan, and the title and governance arrangements for the building."

As Nicolof says, those people who may have owned a house in the past but whose personal circumstances mean they no longer own property and are in much the same financial position as a first-home buyer can also be considered for a first-home buyer's withdrawal.

Instead of contacting your KiwiSaver provider you will need to get in touch with Housing New Zealand so its team can assess your claim to unlock your KiwiSaver funds.

Like other first-home buyers you can't have used your KiwiSaver funds for a home purchase in the past and you must have been a KiwiSaver member for at least three years.

You must also be earning a modest wage - $80,000 or under before tax, $120,000 or under before tax if you're planning to buy a house on your own or a combined household income of $120,000 before tax if you're going in with your partner or several other people.

You also can't have large sums of money tied up in what Housing New Zealand calls "realisable assets" - the likes of shares, term deposits, fancy boats or collectable cars - that if sold or cashed up would give you funds worth more than 20 per cent of a modest, entry-level home.

That "asset cap" varies depending on where you're planning to buy but ranges from $97,000 in Auckland to $60,000 in many parts of the country.

The Housing New Zealand website is the best source of information for first-home buyers who have owned a property in the past, plus details of the KiwiSaver deposit subsidy of up to $5000 available for people who are earning a modest income.

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.