Saving for your first home? Consider KiwiSaver

KiwiSaver is transforming the way people buy their first homes, with first home buyers who have now been in KiwiSaver for three to five years reaping the reward; using their savings as a deposit for their first home.

There are two sweeteners in KiwiSaver that anyone who dreams of buying their own home should know about.

1. First home deposit subsidy:

First home buyers may qualify for a government subsidy of up to $5,000 each if they are members of KiwiSaver. A couple could be entitled to $10,000! How does it work? Contributions of $5,000 per year over a 3-year period, into a Kiwisaver account, can attract a $1,000 subsidy per $5,000 saved (subject to a minimum percentage of income being contributed). KiwiSavers must save for a minimum of three years to qualify for $3,000. The maximum subsidy is $5,000 per person after five years.

To qualify, a single or couple’s combined income must be less than $100,000. Most of the people who qualify will be first home buyers. In some cases “second chance” home buyers returning to the property market can qualify for the subsidy. For all the rules, check out Housing New Zealand’s website.

2. Deposit withdrawal:

First home buyers who don’t qualify for the subsidy can still withdraw both their own and their employer’s KiwiSaver contributions regardless of their income. They just can’t withdraw the $1,000 kick-start or any member tax credits. The details for this scheme can be found in the KiwiSaver guide to buying your first home.

Those people who can take advantage of one or both of these schemes could have a ready-made deposit for their first home. If, for example, a couple withdraws $10,000 of their own savings from KiwiSaver and qualifies for a $10,000 subsidy, that’s enough for a 10% deposit on a $200,000 starter home in most locations or an apartment in the more expensive main centers.

First home buyers who want a roof of their heads badly enough will also look for other schemes to help them buy. The government’s Welcome Home Loan, for example, allows qualifying first time home buyers to buy property without a deposit. Despite its name, the Welcome Home Loan isn’t a loan or mortgage, but a guarantee from the government that allows first home buyers to borrow up to $200,000 with no deposit or $350,000 with a 15% deposit. Three or more friends or whanau members can team up together to buy a home. There are of course conditions, which can be found at the Welcome Home Loan website.

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