Using KiwiSaver for your first home purchase

Home ownership is a balance of risk and reward. The first home buyers I’ve spoken to know that all too well. With house prices (more or less consistently) on the rise over the past many years, those on the outside of home ownership see an ever-growing hurdle to enter the market.

Perhaps now (this is written in May 2020 – at the tail-end of COVID-19), with lending restrictions eased, it is easier for first home buyers to enter the market.

If you come to see me for advice, then I’ll point you to the risks while at the same time not spoiling the anticipation of home ownership rewards. It’s all too tempting to enter home ownership with little thought to what happens should interest rates climb.

Yes, you can access your KiwiSaver for your first home purchase, but keep in mind that lenders will want to be careful to ensure that the loan repayments can be honored long-term. The initial deposit is a very small part of servicing a mortgage and therefore I will advise on a mortgage structure with a long-term view.

The pre-requisites for using KiwiSaver for first home withdrawal:

  • You’re a first-time property or land owner (with some possible exceptions).
  • You’ve been a member of KiwiSaver for at least 3 years.
  • The property has to be in New Zealand.
  • You have to live in the home or build on the land that you’re buying.
  • You and only make one withdrawal.

There is a government “First Home Loan” grant. Under this scheme, the government will contribute to your purchase, up to $5,000 for an older, existing home or up to 10,000 for a new home or land that you plan to build a home on. Another benefit is that you can combine the first home buyer grants for a total of $20,000 if both have contributed to KiwiSaver for five years. There are, as expected, some eligibility criteria and it pays to speak to an expert so that you can navigate this process correctly and without disappointment.

Where to go

For information on the “First Home Grant” go to: http://kaingaora.govt.nz/home-ownership/first-home-loan/

For information on using your KiwiSaver for your first home purchase go to: https://kaingaora.govt.nz/home-ownership/kiwisaver-first-home-withdrawal/

You can also contact me or set up a meeting to discuss your options.