KiwiSaver First Home Buyers Withdrawal: 11 Useful Steps

Learning how to withdraw from KiwiSaver for a first home – or what boxes you need to tick for the the Kainga Ora First Home Loan – can help you avoid tears along the way towards buying your first home.

House hunting is stressful enough, without finding out you missed a step toward KiwiSaver first home withdrawal approval.

To avoid a nasty surprise at the last moment, there are a number of things you need to know about the KiwiSaver first home process.

It’s important to note that the Kainga Ora First Home Grant is no longer available, but first time buyers can still access the First Home Loan.

KiwiSaver first home withdrawal process

1. Know the difference between the First-Home Withdrawal and First Home Loan

KiwiSaver’s First-Home Withdrawal is different to the First Home Loan, as it allows you to withdraw from your savings and put that money towards buying your first home. However, you’ll need to have been a KiwiSaver member for at least three years and leave a minimum of $1000 in your KiwiSaver account.

Finding the deposit for your first home can be a challenge, with most lenders currently requiring a minimum 20% deposit. Kainga Ora’s First Home Loan makes this easier for first time buyers, allowing you to only need a 5% deposit.

2. You must be a first home buyer

To access the KiwiSaver First-Home Withdrawal and First Home Loan, you must be a first home buyer and, if you’re buying as a couple, your partner has to be, too. It’s important to note that this does not include ownership of Māori land.

Second time buyers can sometimes qualify if they can prove they are in the same financial position as a first time buyer, due to having gone through a divorce or other difficult financial circumstances.

If you are in any doubt about this, talk to your solicitor. You don’t want to discover only one of you is eligible.

3. Apply to KiwiSaver/a participating lender

In the case of a KiwiSaver first home withdrawal, you should apply to your KiwiSaver provider. Contact your KiwiSaver provider as soon as you sign a sale and purchase agreement. Your provider will pay the funds into your solicitor’s trust account.

Compare Home Loans

To apply for a First Home Loan, you need to choose a participating lender and complete their loan application form. You will also need to meet the lending requirements of a participating bank or lender to service a home loan.

Banks and lenders will have their own lending criteria they will assess you on as part of the lending process, and can include your financial ability to repay the loan, your current level of debt, and your credit history.

First-Home Loan tips

4. No “high income” earners allowed

To qualify for the First Home Loan, you must have earned less than the income caps in the last year. Each cap is before tax. These caps are:

  • $95,000 or less for an individual
  • $150,000 or less for an individual buyer with one or more dependents
  • $150,000 or less for two or more buyers, regardless of dependents

The catch 22: if you’re buying in one of the main centres, this level of income may not be high enough to buy much in the way of a home.

5. Meet the residency criteria

To be eligible for a First Home Loan, you must be a New Zealand citizen, permanent resident, or a resident visa holder who is ordinarily a resident in New Zealand.

6. Have a 5% deposit

To be eligible for the First Home Loan, you must have a minimum deposit that is at least 5% of the purchase price of the home you are interested in buying (inclusive of all savings, grants, first-home withdrawals, and gifts).

7. You can’t purchase land

To be eligible for the First Home Loan, you cannot be purchasing a property of more than one hectare.

8. You can’t use a KiwiSaver first home withdrawal for the initial deposit when buying at auction

When you buy a house at auction, you have to pay a deposit immediately. This is generally 10%, however, it is possible for the buyer to specify an amount different to this prior to the auction. Likewise, the seller may specify a different deposit amount requirement.

You cannot withdraw Kiwisaver first home funds in advance when buying a property at auction. However, you can use your Kiwisaver funds for the deposit post-auction. You’ll need to ask the real estate agent to seek a variation to the auction conditions to do this.

9. You must live in the house for six months

Don’t be clever and think you can buy a rental investment property or bach with your KiwiSaver first home loan or withdrawal. You’ll need to live in the home for six months before you can rent it out.

If you’re buying your first home, we recommend you find yourself a lawyer early in the process to avoid any of the pitfalls mentioned above.

10. Pay any fees

If you’re applying for a First Home Loan, you may be required to pay a 0.5% Lender’s Mortgage Insurance premium and loan application fee (if applied by the lender).

11. Review your KiwiSaver provider, scheme and fund type

Regardless of whether you are using your KiwiSaver savings towards retirement or a first home, it’s encouraged that you regularly review your investment to see how it’s performing and whether it’s still working for you. If you plan to withdraw your funds within the next couple of years, you may find that a more conservative fund type will work for you. That’s because conservative fund types by nature fluctuate less, so you are likely to have a better idea of the funds that will be available for you to put towards a first home. While Canstar can’t give you personalised financial advice, we can help you compare your options, so you can get a clearer idea of whether your investment is working for you. To see how KiwiSaver providers compare in the market, just hit the button below to use our free comparison tools.

Compare KiwiSaver funds with Canstar

About the author of this page

This report was written by Canstar Content Producer, Caitlin Bingham. Caitlin is an experienced writer whose passion for creativity led her to study communication and journalism. She began her career freelancing as a content writer, before joining the Canstar team.

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