Dreaming of buying your first home and wondering how your KiwiSaver funds can help you achieve that goal? You’re not alone.
Navigating the process of KiwiSaver first-home withdrawals can be challenging, but we’re here to help. In this article, we’ll discuss the current eligibility criteria, available grants, and how to coordinate the withdrawal process, all while considering the long-term impact on your retirement savings.
Check the eligibility criteria
To access your KiwiSaver funds for a first-home withdrawal, you must meet specific eligibility criteria. In short:
- You need to have been a KiwiSaver member for at least three years.
- You must intend to live in the property for a minimum of six months.
- You have not made a KiwiSaver first-home withdrawal before.
As Kāinga Ora explains here, in some cases even if you’ve owned a home in the past and don’t currently, you could still qualify for a first-home withdrawal. To determine whether you are in the same financial position as a first-home buyer, Kāinga Ora will check certain criteria, including the total value of any realisable assets (e.g., money in bank accounts, shares, vehicles etc.).
Understand the different types of help
In addition to withdrawing your KiwiSaver funds, you may also be eligible for additional financial assistance through the First Home Grant. This provides eligible first-time homebuyers with financial support, up to a certain limit.
To be eligible, you must have been contributing to KiwiSaver for at least three years and meet specific income, deposit, and property requirements. The list of eligibility criteria is quite long, so we recommend visiting the dedicated page on the Kāinga Ora’s website.
Additionally, the First Home Loan, a Government-backed mortgage product, may also be available to help you with your home purchase if you have a low deposit.
This option is not just open to KiwiSaver members. To be eligible, you need to have at least a 5% deposit and meet specific criteria, including lending criteria, income caps, and property criteria. Once again, we strongly encourage you to check the up-to-date requirements from the Kāinga Ora’s website.
Consider the long-term impact on your retirement savings
While using your KiwiSaver funds for a first-home purchase can be incredibly helpful, it’s essential to consider the long-term impact on your retirement savings. Withdrawing funds now means you’ll have less in your KiwiSaver account, which could affect your retirement lifestyle.
Before proceeding, make sure you assess your future financial goals; it can be a good idea to talk to an investment adviser about it. Plus, after the keys to your first home are safe in your hands, you may needto adjust your KiwiSaver contributions if you can afford it, to get back on track for a comfortable retirement. Once again, an investment adviser can help you understand how this works and the potential scenarios for your retirement savings.
Coordinate the withdrawal process
The process of withdrawing your KiwiSaver funds for a first-home purchase requires you to submit the application within an appropriate timeframe, and keep in mind that the entire process can take several weeks.
You’ll also likely need to provide your KiwiSaver provider with supporting documentation, such as a signed sale-and-purchase agreement and confirmation of your deposit. Once the application has been submitted, make sure you keep in close contact with your KiwiSaver provider throughout the process to ensure a smooth transaction.
Consult a mortgage adviser (like us)
Buying your first home is an exciting milestone, and your KiwiSaver funds could play a significant role in achieving this goal.
Even though we can’t give you mortgage advice, or tell you whether withdrawing from KiwiSaver is right for you, consulting a mortgage adviser can provide valuable guidance and support throughout the process. We can give you information on the available options to maximise your first-home deposit, as well as the key steps to take to apply for a KiwiSaver first-home withdrawal. Get in touch with us today.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.