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5 stages of buying a home with KiwiSaver

Every year almost 35,000 New Zealanders are using KiwiSaver to help buy their first home. Want to know how to do it? We’re here to help. Check out our handy guide below.

5 stages of buying a home with KiwiSaver

Every year almost 35,000 New Zealanders are using KiwiSaver to help buy their first home. Want to know how to do it? We’re here to help. Check out our handy guide below.

Coronavirus market impacts

Due to the impact the coronavirus pandemic is having on the investment markets, KiwiSaver schemes have been impacted.

If the timeframe to buy your first home is still a while away and you selected a fund that meets you risk appetite, we suggest you hold tight. All investments have their highs and their lows, but historically markets have trended upwards and rebounded from crashes. Changing your fund or withdrawing now, means you lock-in losses.

If you still plan to buy a home in a shorter timeframe, within the next 12 months, it may be worth considering your fund choice. Moving your funds to a lower risk fund (like Cash) may be an option to reduce any further significant loss.

Stay up to date on what COVID-19 means for you in the areas of finance, health and the economy, here.

Stage 1.
Checking your eligibility

noun_Question_white ELIGIBILITY TEST

Answer a few quick questions to see if you’re eligible

Check now

To qualify for a first home withdrawal you must meet the following criteria:

  • You need to have been in KiwiSaver or a complying superannuation fund for a minimum of three years.
  • You can only make a KiwiSaver first home withdrawal once.
  • If you’ve owned property before, you may qualify for a second chance home buyer withdrawal. You may also qualify for a HomeStart grant. To check eligibility contact Housing New Zealand Corporation.
  • KiwiSaver first home withdrawal is only available to applicants who want to buy homes or land in New Zealand and/or have the right to occupy Maori land.
  • You need to live in the home or land you intend to buy. Investment properties do not qualify.

Stage 2.
Finding out what you can withdraw

Check your KiwiSaver balance and work out how much you want to take out. If you’re with Kiwi Wealth you can login at the top of the page.

  • When estimating how much you can withdraw, factor-in that you will need to leave a minimum of $1,000 in your KiwiSaver account.
  • Be aware you cannot withdraw any amount transferred from a complying Australian superannuation scheme. Members with UK funds should contact us for further details.
  • Check your KiwiSaver HomeStart grant eligibility. You could get up to $5,000 for an existing home or $10,000 for a new build. Contact Housing New Zealand Corporation for criteria.
  • Any amount approved for your withdrawal is subject to market performance until it is ready to pay, which will happen in the next weekly rebalancing cycle. This will mean the amount you're paid could differ from your current balance.
How much you can borrow?

Understanding how much you can borrow is the first step of hunting for houses you can afford.
Our sister company Kiwibank has Mobile Mortgage Managers who can come and visit you to chat through your house-buying journey and help you work through how to get prepared. To get a sense of how much you might be able to borrow, you can try their handy mortgage calculators.

noun_Light Bulb_blue  Get yourself in the right fund

How you manage your KiwiSaver investment can affect your balance. The timeframe around when you’re planning to buy a house can also be an important factor. If you’re planning to buy your first home in the next 12 months, a more conservative investment fund may be more appropriate than opting for a growth fund.

Check to see if you’re in the right fund

Stage 3.
Preparing for house-hunting

Now you have an idea about what you can afford, the house-hunting can begin. It’s worthwhile understanding what the steps are should you find a home that you want to put an offer in on. 

Leave plenty of time to withdraw your KiwiSaver investment

Your KiwiSaver account is a locked-in investment which means releasing funds may take longer than you might expect.

Kiwi Wealth members need to get their application to us at least 15 working days before the date they'll need their funds for a deposit or settlement.

Have everything you need for your withdrawal application

KiwiSaver can be used for your deposit and/or at settlement. Before applying to withdraw funds for your house, here’s what you’ll need to have done:

  • Confirmed your eligibility
  • Ensure you have provided certified proof of identity
  • Found out how much you can withdraw from your KiwiSaver account
  • Confirmed relevant Housing New Zealand Corporation approval (if you qualify for second chance withdrawal).
  • Confirmed you have the right to occupy Maori land (if applicable).
  • Appointed a property lawyer
Familiarise yourself with what your property lawyer will need to do

Your property lawyer will play an important role in buying your home and getting access to your funds. When you are making an offer on a house, they need to post your KiwiSaver scheme provider:

  • A letter allowing funds to be transferred to them.
  • Confirmation about using KiwiSaver at deposit or settlement stage.
  • A copy of the sale and purchase agreement naming you as a purchaser.
  • Confirmation from Housing New Zealand regarding qualification for a second chance withdrawal (if applicable).
  • Proof that you have the right to occupy Maori land (if applicable).
Ready to apply for your first home withdrawal?
Download the form     

Stage 4.
Making an offer

While your property lawyer will manage the paperwork, it’s important you understand the ins and outs of the process and the lead time your KiwiSaver scheme provider needs. This may take up to 15 working days.

Ways to buy a house

There are three main ways to buy a house in New Zealand:

Your KiwiSaver investment can’t be used towards a deposit if you’re buying at auction. If you’re buying property in this way, your KiwiSaver money will be used at settlement.

Offer and negotiation
A real estate agent will act as your go-between with the seller during price negotiations. Allow your solicitor plenty of time to organise the withdrawal of your KiwiSaver investment and to complete the paperwork required.

Once the seller has chosen the best written offer, they may choose to negotiate. Alert your solicitor if you are successful to allow time for KiwiSaver investment to be transferred and paperwork to be completed.

After your offer is accepted

When an offer has been accepted, in addition to the first or second chance home withdrawal form, your property lawyer will need to send your KiwiSaver Scheme provider:

  • A copy of the sale and purchase agreement
  • Confirmation of their Trust account number
  • A completed application form. This must include a statutory declaration, and certified copies of a) proof of identity and b) proof of residential address.
  • Any Housing New Zealand Corporation confirmation if you qualify for second chance withdrawal and/or proof you have the right to occupy Maori land (if applicable).
Approaching settlement

Once we have the required paper work it’s just a matter of waiting for your settlement day. The following will happen behind the scenes:

  • Your KiwiSaver first home withdrawal, and if applicable, your HomeStart grant from Housing NZ, will be paid directly to your property lawyer on or before the settlement day.
  • Your property lawyer will check everything is in order (like checking the rates and utilities have been paid by the seller and are up to date).
  • A statement will be sent to your bank showing the amount required to settle the sale. Your property lawyer will then arrange for your loan to be drawn down and the money transferred to the seller.

Once that has been completed, all you need to do is get the keys and move into your new home.

Stage 5.
Getting back on financial track

Get your free money

Now that you’ve moved in, and your KiwiSaver account has significantly reduced, it’s important to consider rebuilding your investment to help prepare for the retirement you want. Although paying off your new large debt ASAP may seem the best way forward, experts say KiwiSaver has a secret sauce that can really help investment balances quickly build up again and significantly increase your retirement savings:  “free” money.  If you’re eligible you may receive:

  • Employer contributions at a minimum of 3%.
  • Government contributions up to $521 if you put in $1042 each KiwiSaver year (the KiwiSaver year runs from 1 July through to 30 June).

Combined, this approach can outperform repayment interest, which is why experts recommend getting back in the saddle with KiwiSaver ASAP. 

noun_Light Bulb_blue  Take control of your investment easily

KiwiSaver investments are also not just set and forget. You may have changed your investment fund because you were saving for a house. Now you’re in a house, it’s important to check your investment fund choice again, given your investment timeframe goals and appetite for risk may have changed.

See if you’re in the right investment fund 

Help with your KiwiSaver investment

Remember to have your IRD number and Kiwi Wealth KiwiSaver Scheme membership number handy

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