Buying your first home is an exciting step, but it can also feel overwhelming. If you’ve been contributing to KiwiSaver, you may be able to use some of your savings as a deposit for your first home. Here’s how the process works and what you need to consider before making a withdrawal.
What is KiwiSaver?
KiwiSaver is a retirement savings scheme designed to help New Zealanders save for their future. A valuable feature of the scheme is that it allows you to use your KiwiSaver funds to help buy your first home, giving you a significant financial boost when you need it most.
Can You Withdraw KiwiSaver for a House Deposit?
Yes, after contributing to KiwiSaver for at least three years, you can withdraw most of your balance to help with the purchase of your first home. The funds you can take out include:
- Your contributions
- Your employer’s contributions
- The government contribution
- Interest you have earned
- Fee subsidies (if you got these).
However, you can’t withdraw the initial $1,000 government kick-start (if applicable). Funds transferred from an Australian Complying Superannuation scheme cannot be withdrawn.
Who is Eligible?
To be eligible for a KiwiSaver first-home withdrawal:
- You must have been a KiwiSaver member for at least three years.
- You need to be buying your first home (or in some cases, meet the criteria for a “second-chance” buyer).
- The home must be for your personal use, not as an investment property.
How to Start the Process
The first step is to contact your KiwiSaver provider to get the necessary forms. You’ll need to provide documents like your sale and purchase agreement, along with your solicitor’s details. Your solicitor plays a key role in managing the transfer of funds on settlement day.
How Much Can You Withdraw?
Most first-time buyers can withdraw all of their KiwiSaver balance except for the $1,000 kick-start. This can provide a significant boost to your home deposit, making it easier to meet lending criteria or reduce the amount you need to borrow.
Key Considerations
Before you withdraw from KiwiSaver, there are some important factors to think about:
Impact on Your Retirement Savings
KiwiSaver is primarily for retirement. Taking a large chunk out now will mean less for your retirement later. Consider whether you may want to increase your KiwiSaver contributions after purchasing your home to rebuild your balance.Covering Other Costs
While using KiwiSaver helps with your deposit, there are other costs involved in buying a home. You’ll need to budget for legal fees, moving costs, and possibly repairs or renovations after you move in.Timing
Ensure that your withdrawal is processed in time for settlement. Start the process as soon as you have a sale and purchase agreement to avoid delays that could affect your ability to complete the purchase.
Can You Use KiwiSaver for Building?
Yes, you can use KiwiSaver to buy land and build a new home. The same rules apply, and you must intend to live in the property. If you’re building, make sure your plans fit within your budget and timeline, as construction projects can often have delays or unexpected costs.
Work with a Mortgage Broker
Navigating KiwiSaver withdrawals and the home-buying process can be tricky. This is where a mortgage broker can help. An independent advisor, like Andre Stokes from Mortgage & Insurance NZ, can guide you through the process. With access to a range of lenders, a broker can help you find the best home loan rates while also advising on how best to use your KiwiSaver funds.
What Happens Next?
Once you’ve filled out your withdrawal forms and provided the necessary documentation, your KiwiSaver provider will process your request. Your solicitor will ensure that the funds are transferred in time for settlement.
It’s a good idea to keep communication open with both your KiwiSaver provider and your solicitor throughout the process. That way, everything will go smoothly when it’s time to complete your home purchase.
Final Thoughts
Using your KiwiSaver funds to buy your first home can make a huge difference in achieving your homeownership goals. The process can feel complex, but with the right advice and planning, it’s a great way to turn your savings into a home deposit.
If you’re thinking about making a withdrawal, be sure to start early, understand the full process, and work with professionals to ensure everything goes smoothly. With KiwiSaver and a solid plan in place, you’ll soon be holding the keys to your first home.
