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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Part 1.Subsidy is $1000 for every year you have been in Kiwi saver (up to $3000) however it is only available if your house costs you under the cap. in auckland that is $400,000k otherwise you cant get the subsidy if you house costs any more than that. comes from HNZC. Also if you use this withdrawal you must live in the house for a minimum of 6 months.
Part 2. Withdrawal if you qualify as first home or second time round buyer. You can withdraw your contributions to assist you with the purchase of a house. this is seperate from the subsidy and can be used no matter what your house costs, ie over the cap for you area, so if you buy a house in auckland for $401k plus you can still use it. you do not have to live in the house as it is your contributions you are using so you are not restricted by the rules of HNZC re the six months.
I was able to use the withdrawal only in the purchase of my property as I purchased over the cap in my area
Consumer, please check the statement 'the house subsidy is from the government's contribution to your scheme'. If this were the case the money would come out of your scheme account would it not? That's not the way it worked for us. Only ours and our employer's contributions came out of our scheme accounts (the first home withdrawal) and the deposit subsidy is a totally separate payment that comes from HNZC, not 'from the government's contributions to your scheme'. Regards
an article about how confusing kiwisaver is, that begins with a technically incorrect and confusing statement!!
you can get both. you can do the first home withdrawal provided your provider allows it. and you can apply for the first home deposit subsidy and provided you meet all the criteria you will get the subsidy also. pays to plan ahead and check out all the criteria on the various web sites (ird, kiwisaver, housing corp nz, sorted etc) so you don't get any surprises when it comes time to apply! in my experienceo, it's one of the longer paper work wars you'll face, but worth it of course. We managed to net about 30k all up to go towards our house. good luck.
$30,000 wow thats awesome! how long were you in kiwisaver to build up that much? and was it you and your partner?
thanks
Yes my partner and I. We started on day 1 so 4 years total. 30k is 22k from our accounts plus 4k each in subsidy. As I said, a little study and forethought and you can maximise the likely outcome when it comes time to buy your first house. Word of advice though, don't put more into Kiwisaver than you need to in order to qualify for the benefits. Put the rest of your money somewhere else so it's not locked away for no reason. Good luck.
Hi, just want to make it clear for myself. Can we apply for BOTH of the types of assistance together to buy our first home? Or can we only choose ONE type of assistance?
thanks
David.