July 2024
KiwiSaver is a voluntary, work-based savings initiative to help New Zealanders with long-term savings for retirement. It is also useful in helping people get into home ownership with the KiwiSaver first-home withdrawal programme.
Using your KiwiSaver funds can be a way to boost your savings for a down payment/deposit on a house or land purchase.
There are quite a lot of rules and criteria, so it is important that you know all the ins and outs to ensure that you do not miss out on this opportunity, as you can only withdraw your KiwiSaver funds on one occasion.
We have answered various frequently asked questions below to streamline the process for you:
1. Who is eligible to withdraw their KiwiSaver savings for a house purchase?
You can withdraw your KiwiSaver savings if you have been a member of KiwiSaver for 3 years or more and it is your first time making a withdrawal to buy a home.
You must be purchasing your first home in New Zealand or else be eligible for the KiwiSaver second chance withdrawal (more information on that below). You must also intend to live in the property you are buying, meaning that you cannot use your KiwiSaver funds to buy an investment property.
2. How much can I withdraw?
You can withdraw all, or part, of your savings (including all your employer’s contributions, all interest that you have earned, and any tax credits) but excluding the government “kickstart” of $1,000 (this must be left in your KiwiSaver account).
Please note though that you cannot withdraw any funds that have been transferred from an Australian Complying Superannuation scheme into your KiwiSaver account.
3. How do I apply?
You will need to apply through your KiwiSaver scheme provider. The application forms are available from your KiwiSaver provider directly – typically available for download on their website. You can also apply ahead of time to your provider to obtain a pre-approval and receive an estimate of how much you can withdraw.
The withdrawal application usually includes a statutory declaration, so you will need to have this witnessed by your lawyer or a local JP or Notary Public.
Once you have filled out your application and signed the statutory declaration, your lawyer will be the one who submits the application on your behalf and will provide the necessary legal undertaking required.
The timeframes: most KiwiSaver providers require 10 – 15 working days to process the application, so any settlement date for your property purchase will need to be at least 2 weeks out from the date you apply for your withdrawal (if you are using your KiwiSaver funds for settlement). You need to make sure that the settlement date in your Agreement for Sale and Purchase provides you with enough time to receive your withdrawal ahead of this date.
4. Can I use my KiwiSaver funds to buy a section/bare land?
Yes. It can also be used towards a house and land package. There are no restrictions on when a house must be built.
It is crucial to remember that you must withdraw your Kiwisaver at the time you settle on the land purchase. You will not be able to withdraw anything after you have settled on the land and own an interest in real estate (this is what can catch people out, so make sure you inform your solicitor as soon as possible that you wish to withdraw your KiwiSaver funds when your section purchase is under contract, not after you have bought the land).
5. Can I use my KiwiSaver to buy a house with my spouse/partner?
Yes, providing that you both meet the eligibility criteria and don’t currently own a home together. You can each withdraw your individual savings and pool the money together toward the property purchase. Note however that you will need to make separate applications to your respective KiwiSaver providers.
6. What if my partner has withdrawn their KiwiSaver funds previously?
If your partner has withdrawn KiwiSaver before, they will not be able to withdraw again but this will not restrict your ability to do so. You will still be able to apply for a withdrawal in your own right.
7. Who receives the funds?
Your KiwiSaver provider will deposit your KiwiSaver funds directly into your lawyer’s trust account on or before the deposit due date or settlement day (depending on what you are withdrawing it for). It is not paid into your personal bank account. Your solicitor will make payment of the deposit or settlement to the vendor on your behalf.
8. When does my solicitor get involved?
Right from the beginning!. You should inform your lawyer that you wish to withdraw your KiwiSaver savings as soon as enter into a sale and purchase agreement for a property (if not before). Your lawyer can also assist with completing your withdrawal application form and witnessing the statutory declaration required as part of the application. Your lawyer will then send the application to your KiwiSaver provider on your behalf, who will then pay the funds into your law firm’s trust account.
You should also inform your bank or mortgage broker that you wish to use your KiwiSaver savings as this will help with your finance pre-approval application.
9. Is there a house price cap for making a KiwiSaver withdrawal?
No. There is no limit on the purchase price.
10. Can I withdraw my KiwiSaver funds for payment of the house deposit?
Yes. But you must make sure that the deposit will be payable when the agreement goes unconditional, not on signing the agreement and that the deposit is paid to the vendor’s solicitor. This is because it will take time for your KiwiSaver withdrawal application to be processed (up to 10 – 15 business days). You will not be able to receive the funds immediately.
The vendor will also need to agree that their solicitor will hold the funds in their trust account until the settlement date.
Please allow at least 10 – 15 working days for your finance condition in your sale and purchase agreement and ensure that you submit your KiwiSaver withdrawal application on the same day you sign the agreement if you are wanting to withdraw the funds for payment of the deposit.
Any surplus KiwiSaver funds will be held by your solicitor in their trust account until settlement and must be used towards payment of the purchase price on settlement. The surplus funds cannot be paid into your personal bank account.
11. I’m a previous homeowner – can I still get the first-home withdrawal?
Yes, you may still be eligible if you no longer have an interest in property, have never made a withdrawal before and are in the same financial position as a first home buyer (this is known as the second chance withdrawal). You will not be able to make a second withdrawal if you have previously withdrawn your KiwiSaver funds.
You will first need to apply to Kainga Ora – Homes and Communities to determine if you are a qualifying person. You will still need to meet the standard KiwiSaver withdrawal eligibility criteria, mainly having been a KiwiSaver member for at least 3 years. If you receive an approval from Kainga Ora, you can then submit your withdrawal application through your scheme provider and provide them with a copy of the approval confirmation letter.
Please note that you are considered a first home buyer if you do not have reasonable assets totalling more than 20% of the house price cap in the area you are buying in. Please visit the Kainga Ora website for more information on the house price caps.
12. What can I do to ensure my application is successful and processed in time?
Obtain pre-approval from your KiwiSaver provider to confirm you are eligible and to know how much you are able to withdraw.
Fill out the application form correctly and do not omit any required information. Make sure you submit all the required supporting documentation and have your lawyer certify your identity documents in conjunction with your KiwiSaver scheme provider’s requirements. Otherwise, your application could be stalled, and this will delay the settlement of your property purchase and potentially incur a penalty interest fee from the vendor. Goldman Legal can assist you with your application to ensure it is successful and processed in time.
If you are thinking of buying a property and would like to use your KiwiSaver, get in touch and we can help you through the entire process.
50 Orford Drive, Jack’s Point, Queenstown, New Zealand
PO Box 1399, Queenstown 9348, New Zealand
Tel: +64 3 441 2141 Email: [email protected]
Level 1, 1 Searle Lane, Queenstown 9300, New Zealand
PO Box 1399, Queenstown 9348, New Zealand
Tel: +64 3 441 2141
Email: [email protected]
First Home Grant scrapped
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