A carrot for joining KiwiSaver was that it could be used to help buy your first home. But there's confusion about how this assistance works.
You can apply for 2 types of assistance through KiwiSaver: a house deposit subsidy or what’s called a first-home withdrawal. You can apply for both – the house subsidy is from the government's contribution to your scheme and the withdrawal is from your own contributions from your wages.
House deposit subsidy
You need to have contributed to Kiwisaver for at least 3 years before you can apply for the house deposit subsidy. It's worth $1000 for each year you have saved with the scheme. The most you can receive is $5000 after 5 years. It must be used on a first home, although there may be exceptions if you’ve owned a home before but are now in the same financial position as a first-home buyer.
The maximum price you can pay for a house and still receive the subsidy is $400,000 for Wellington, Auckland and the Queenstown Lakes district; it’s $300,000 everywhere else. You must also meet a household income test (a combined yearly pre-tax income of $100,000 or less for 1 to 2 buyers; $140,000 or less for 3 or more buyers). You must also intend to live in the house for at least 6 months.
The subsidy is paid directly to your solicitor once a deal has gone "unconditional".
You apply for the subsidy through Housing New Zealand. If you haven't found a property yet but want to find out if you're eligible for the subsidy, you can apply for pre-approval. This lasts for 90 days and can be extended. If you already have a sale and purchase agreement, you can apply for the subsidy directly. Once your application is lodged it takes at least 4 weeks before the funds are paid to your solicitor.
First home withdrawal
You can also withdraw your savings from KiwiSaver to put towards a first home purchase after at least 3 years of membership. You may have to apply for pre-approval so you know how much you've got to work with. You can withdraw all or part of your savings, your employer contributions, and investment returns but not the government contributions or tax credits.
Not all complying funds offer the withdrawal option, so it pays to check with your provider. If yours doesn't offer withdrawal, you can easily transfer to another one that does – but the IRD tells us this can take up to 3 months.
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