If you’re looking at purchasing your first home, using your KiwiSaver fund is a fantastic way to get a head start toward your deposit. I thought it may be worthwhile just covering some of the rules for individuals who are struggling to keep up with some of the changes as they happen. As I write this in 2018, the current rules are as follows:
- Can only be withdrawn if you’ve been a member of KiwiSaver for more than 3 years
- Must be purchasing an owner occupied property – not an investment property
- You’re able to withdraw everything in there, except that you must leave $1,000 in there. This includes your contributions, government contributions, employer contributions, and investment gains.
I’m a strong advocate of being a KiwiSaver member because of the returns you get – the Government matches you at 50 cents on the dollar up to $1,042.86. This means that every year if you contribute at least this amount, you’ll get $521.43. I don’t know any other investment that guarantees a 50% return.
In addition to this your employer contributes to your KiwiSaver too – up to 3% of your earnings in most cases – is my understanding.
Based on the above you’re getting $1.50 for every dollar contribution you make (assuming you’re making a 3% contribution) up to $1,042.86, and $1 for $1 every dollar thereafter!
KiwiSaver HomeStart Grant:
There are two types:
1. For existing property purchases – the grant is between $3,000 and $5,000 based on $1,000 per year of KiwiSaver membership.
2. For new property purchases, the above is doubled (between $6,000 and $10,000) based on $2,000 per year of KiwiSaver membership.
The above figures are per KiwiSaver contributor, so if you’re in a couple and purchasing a home together, these figures are doubled again. The maximum contribution however, toward a single dwelling – regardless of the number of KiwiSaver contributors is $10,000 per existing home and $20,000 per new home, so if you are 3 or more people purchasing a home, you will only receive the benefits as if you were 2 (assuming all had been in for 5 years).
The rules to getting access to this are as follows – you must;
- Have been contributing the required minimum amount to KiwiSaver for at least 3 years
- Be 18 or over
- Be purchasing/building your first Home
- Have a household income (before tax) of less than $85,000 per year (for one person), or less than $130,000 per year (for two or more people)
- Have a deposit that is 10% or more of the purchase price, including the addition of the grant
- Be planning to live in the house for at least 6 months from the settlement/completion of the property.
Another key thing to check is if the property is eligible - mainly this relates to house price caps as follows:
- Auckland - Existing Properties $600,000 and New Properties $650,000
- Hamilton City, Tauranga City, Western Bay of Plenty District, Kapiti Coast District, Porirua City, Upper Hutt City, Hutt City, Wellington City, Nelson City, Tasman District, Waimakariri District, Christchurch City, Selwyn District, Queenstown Lakes District - Existing Properties $500,000 and New Properties $550,000
- Rest of New Zealand - Existing Properties $400,000 and New Properties $450,000
If you’ve got any other questions and are still uncertain about accessing Kiwisaver – feel free to get in touch.