The two questions asked time and time again by first home buyers are “How can I possibly afford my deposit?” and “Are my KiwiSaver funds REALLY accessible?” Jaimie sifts through all the confusion and media hype KiwiSaver for first-home buyers 101.
There is plenty of confusion out there surrounding how much you can borrow from your KiwiSaver. Add to this the way the media focuses on regional house-price caps such as $550,000 for Auckland (or $450,000 for Wellington) in a market where the median house price has just topped $940,000 and the possibility of using KiwiSaver funds immediately disappears in the minds of many potential new buyers.
With that in mind, it's probably a good time to clarify the difference between the two options available from KiwiSaver.
So the first option is the KiwiSaver First Home Withdrawal. For this there is no regional cap and no maximum on your income.
Any first home buyer who is a New Zealand resident and has contributed to their KiwiSaver for a minimum of three years can withdraw ALL of their KiwiSaver savings for the purchase of their first home (except for the initial $1000 kick start). OR if you haven't used your KiwiSaver withdrawal previously and are in a similar financial position as a first home buyer again, you may qualify for the Second Chance Home Withdrawal.
The second option is the KiwiSaver HomeStart Grant. This is where the cap and income limit comes in.
The HomeStart Grant is basically a FREE gift from the government and can be combined with your First Home Withdrawal. It works like this: If you're a single buyer with a total income under $80,000 or under $120,000 for two or more buyers and have a deposit of at least 10 per cent (including the grant) you may qualify for a one-off contribution of up to $20,000 per couple. The amount available is determined on how long you have made regular KiwiSaver contributions and whether you are purchasing an existing or newly built home.
So, with the potential to receive one or both of these funds, all of a sudden you’re a good step closer to that first home!
If you would like further information regarding KiwiSaver or sound mortgage advice on what options are available to you please don’t hesitate to contact us.
Jaimie McDonald is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.