Using your Kiwisaver fund to buy your first home.

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fiona taylor lawyerIf you’ve been planning to use KiwiSaver for the deposit on your first home these guidelines will help you understand what you can and cannot do.

When you have to have been a member of KiwiSaver for at least three years you are able to withdraw all your contributions, all your employers’ contributions and any interest that you’ve earned, to purchase your first home. But any Government contributions may not be withdrawn, including the $1000 kick start you received when you first joined.

The most important thing to remember is your KiwiSaver funds cannot be used to pay the deposit on your new home when the contract goes unconditional. Kiwisaver funds can only be used to pay the balance of the purchase price on the settlement date.

You can only apply for a KiwiSaver withdrawal when you have an unconditional agreement to purchase the property. 

Most KiwiSaver providers need at least ten working days to process your application and release the funds, therefore you need to allow at least ten working days between going unconditional and the settlement date. We recommend allowing more than ten days to give yourself peace of mind. If the KiwiSaver funds do not come through in time for settlement you’ll have to settle using funds from another source, for example, a temporary family loan.

You cannot use Kiwisaver to repay a temporary family loan or other ‘bridging finance’. Once you have settled on the property, and you’re unable to apply the KiwiSaver funds directly to the vendor, funds must be returned to the KiwiSaver provider.

One final point to note, if you intend purchasing your first home in the name of a trust, you should check that the provider of your scheme allows this before signing the sales and purchase agreement. You need to be aware that most KiwiSaver providers require the purchase for your first home to be in your personal name.

If your income meets certain criteria you may also be eligible for a HomeStart grant.

If you would like to discuss any matters related to buying and selling residential property, please contact Fiona Taylor on 09 837 6845 or at fiona.taylor@smithpartners.co.nz