Saving a deposit for a house can be tough these days. Using some of your KiwiSaver funds could be a way to help you achieve your house dream.
At Pope & Co. Mortgages we are often asked about the options for using KiwiSaver and/or the KiwiSaver HomeStart grant. Here are some key facts to help you to understand the options.
How much deposit do you need to buy a house?
You generally require a minimum saved deposit of 5% of the purchase price to buy a house, as banks are limited to a maximum loan amount of 95% of the purchase price (subject to Reserve Bank LVR restrictions). Though most banks at the moment require a minimum 10% deposit.
KiwiSaver Withdrawal — what you need to know
If you are a first-home buyer and have been contributing to your KiwiSaver consistently for 3 years you are able to withdraw your KiwiSaver funds to put towards purchasing your first home. It is only your contributions, your employer’s contributions and any member tax credits that can be withdrawn, not the government $1000 kick-start. For a mortgage pre-approval you will need a letter confirming you are eligible to withdraw the funds and how much you can withdraw.
KiwiSaver HomeStart Grant withdrawal
After three years of regularly contributing to KiwiSaver (of at least the minimum allowable percentage of your total income) you may be entitled to the HomeStart grant.
If you are purchasing a new home, a property bought off the plans or land to build a new home on (within 12 months), the HomeStart grant is $2,000 for each year of contribution to the scheme. If you are purchasing land to build a new home on, there is a maximum amount the combined land and new home can cost. The possible grants for a new build are:
- 3 years of contributing = $6,000 (the minimum you can get)
- 4 years of contributing = $8,000
- 5 years of contributing = $10,000 (the maximum you can get).
If you are purchasing an existing/older home, the HomeStart grant is:
$1,000 for each year of contribution to the scheme per person. For example:
- 3 years of contributing = $3,000 (the minimum you can get)
- 4 years of contributing = $4,000
- 5 years of contributing = $5,000 (the maximum you can get).
There is a maximum amount your new home can cost. For example in Auckland the cap is $600,000 for an existing/older property, or $650,000 for a new home or build. In the Wellington region/Kapiti it's $500,000 for an existing/older property or $550,000 for a new home or build.
Criteria for this grant include:
You are 18 or over. You currently do not own a home or land. You have not received the KiwiSaver HomeStart grant or its predecessor the KiwiSaver deposit subsidy before. You are a member of a KiwiSaver scheme and you have contributed at least the minimum percentage to KiwiSaver for at least 3 years.
If you are a sole buyer, you earn less than $85,000 (gross) or $130,000 per couple in the last 12 months. Please note the purchase price of the property has to be within the regional house price caps as shown in the table below:
|Region||House price cap for
|House price cap for
|Auckland, Queenstown Lakes||$600,000||$650,000|
Hamilton City, Tauranga City, Western Bay of Plenty, Kapiti Coast, Porirua City, Upper Hutt City, Wellington City,
|Rest of New Zealand||$400,000||$500,000|
What if you’ve owned a home before?
If you’ve owned a home before, in some circumstances you may still be eligible to withdraw your KiwiSaver savings to purchase your home. Housing New Zealand will need to determine that you are in the same financial position as a first-home buyer. You can contact them on 0508 935 266. Please note that KiwiSaver and HomeStart grant criteria can change at anytime, so please refer to the Housing NZ website for updates.
How do you know if you are eligible?
You can visit the Housing NZ website for a comprehensive list of criteria and details regarding the application process. Find out about whether you are eligible for KiwiSaver and/or the HomeStart Grant.
If you are looking for your first home but haven’t yet found the right house, you can still apply for pre-approval of your HomeStart grant application. We highly recommend you do this. These approvals are valid for six months and will also assist you when applying for finance pre-approval.
We can help you with advice around home buying and KiwiSaver. We can also help with advice around the various mortgage options and what to consider when buying a home.
Contact us to discuss your options on 0800 000 517.