Using KiwiSaver to buy your first home: how it works

Perhaps one of the most daunting parts of the first home buying process is working out how you'll get the money together to pay for a deposit. Saving for a deposit can seem like a mammoth task, with the rising cost of living, that lump sum can always seem out of reach.

To be successful, you'll need to plan carefully, save hard and think smart. Be aware of the schemes that help New Zealanders buy their first house.

How much can I withdraw?

If you meet these requirements, you can withdraw any amount from your KiwiSaver, as long as:

• There's at least $1,000 left at the end, and
• You don't withdraw any amounts transferred from complying Australian super schemes.

You'll also be unable to withdraw Government member tax credits received during any time spent overseas when you didn't have NZ permanent residence since you joined KiwiSaver.

How to apply for KiwiSaver withdrawal

Your KiwiSaver manager will be able to give you a first home withdrawal application form, and an eligibility letter to prove you're allowed to withdraw funds from your KiwiSaver. You'll need to present this letter, along with an estimate of how much you'll be able to withdraw, when you apply for home loan pre-approval.

You'll then want to apply for your first home withdrawal nice and early, once you've found the house or piece of land you want to buy (your KiwiSaver manager will need all documents at least 15 working days before payments are due). From here, as long as you're eligible, you can either:

• Put the funds towards your home deposit while the sale and purchase agreement is still conditional

Or

• Once your offer becomes unconditional, put your KiwiSaver towards the purchase price at settlement.

Note: you should run any important documents, such as your first home withdrawal application form, past your lawyer so they can help you complete it.

The KiwiSaver first home withdrawal can’t be paid out after settlement day, so if it isn't processed before the sale is settled, you’ll miss out.

How to apply for the First Home Grant

You have two options for how the process can work, either:

• You can wait until you’ve got a signed sale and purchase agreement, and then apply for grant approval.

Or

• You can apply for pre-approval before your start looking for a home.

Kāinga Ora handles the applications and they recommend the second approach, because it make things faster. Once granted, pre-approval is valid for 180 days.

Either way, you need to it sorted well before settlement date, ideally at least four weeks ahead of time. As with the KiwiSaver first home withdrawal, the First Home Grant can’t be paid out after the settlement date.

How much is the First Home Loan worth?

How much you can borrow is capped, and this amount depends on where you live. For example, Aucklanders will have a higher cap than provincial residents. So, the maximum you can borrow is the house price cap for that region, minus your 5% deposit.

Applying for the First Home Loan

Once you've checked you're eligible, choose a lender and get your 5% deposit together. Fill out the lender’s loan application and from here you’ll have two options.

1. Apply for a First Home Loan pre-approval:

This shows you meet all the necessary criteria, and the lender will be able to tell you how much they will lend. Once you've found a house within that price range, you can return for final loan approval.

2. Apply for First Home Loan final approval:

If you already have your eye on a property, you can apply for final approval. The lender will need to check that both the house and your circumstances meet their lending criteria.