For many New Zealanders withdrawing your KiwiSaver to buy your first home can be a game-changer for your deposit or settlement. However, there are certain key eligibility criteria and steps to follow to ensure you don’t face any speed bumps in the purchase process.

Generate KiwiSaver Advisor Jake Mickleson says part of that is understanding that the withdrawal itself is only a small part of your journey.

“You want to make sure you've got all your ducks in a row, so it’s important to talk to your lawyer, mortgage expert and if you have a KiwiSaver advisor talking it through with them to make sure that you’re in the best position possible with all of your finances.”

Mickleson says there’s also a lot that can be done in the lead up that’ll help your money go a lot further too.

“We often say to people that the journey of saving for your first home with KiwiSaver doesn't start when it's time to pull it out. It starts by having it invested correctly a long time before then so that you’re much better off when the time comes to purchase.”

WHERE DO I START?

So, you’ve invested well, you’ve found your dream first home, and the time has come to access your KiwiSaver - where do you begin?

Mickleson says it starts by talking to a mortgage expert and contacting your KiwiSaver provider.

“Your provider will then send you a letter that you can take to your lender, whether it be the bank or a mortgage broker. That’ll prove how much you have in your KiwiSaver that you can withdraw as well as your eligibility.”

You can then withdraw everything from your fund apart from $1,000 that needs to remain, and any government contributions put into the fund while you are overseas.

“That means you don’t have to start from zero again. So, if you're now saving for retirement there’s at least $1,000 to kick start that journey.”

Mickleson says there’s a few criteria that need to be ticked off, but once that’s done you can start the conversation.

“You can go through your lawyer to apply for the withdrawal or through a KiwiSaver advisor who can guide you through the process.”

WHAT IS THE CRITERIA?

Mickleson says there are several things you need in order to be eligible.

• You must be in KiwiSaver for at least three years;
• You must qualify as a first home buyer which means you cannot have owned a home or land before;
• You must intend to live in the home or land you buy;
• The home or land needs to be in New Zealand and/or you have the right to occupy Māori land;
• If you’re planning on buying a house with a partner, if eligible you can both apply for a first home withdrawal.

WHAT ARE THE TIMELINES?

The timelines to access your KiwiSaver can vary between providers, but the general rule of thumb is that it takes around 10 working days to process.

“To speed up the process some providers like Generate already have a letter built into their app and your account which is pre-populated and ready to go with your KiwiSaver balance that can go straight to your mortgage broker or lender.”

“It's one less party that you're waiting on to get all the paperwork together for an application.”

To avoid any last minute stress, Mickleson says it pays to be organised and not treat your KiwiSaver application as an afterthought.

“People do forget, so I recommend having a great checklist, as well as surrounding yourself with people who will keep you accountable to that too.”

CAN I USE MY KIWISAVER FOR A SECOND HOME?

There are some situations where you might be able to make a KiwiSaver withdrawal to go towards a second home. The first thing you’ll need to do is contact Kāinga Ora who will determine if you’re in the same financial position as a first homebuyer. To qualify you will need:

• To have been enrolled in KiwiSaver for over three years;
• No longer own or have a share/interest in any property (other than Māori land ownership);
• Have not previously withdrawn any of your KiwiSaver balance for use on a home deposit;
• Your realisable assets do not total to more than 20% of the house price cap for an existing/older property in the region in which you are intending on purchasing your home Realisable assets include:
• Any cash or money held in bank accounts (including term deposits)
• Investments held with banks, platforms or any other form of provider
• Cash paid to a solicitor or real estate agent for deposit on a property
• Any cars or motorbikes that are not your main mode of transport
• Any boats, tractors, motorhomes etc
• Any other individual assets that are worth more than $5,000

If Kainga Ora deem you to be in the same financial position as a first home buyer, the letter produced by Kainga Ora will need to be forwarded to your scheme provider along with your application to withdraw your KiwiSaver.

I WANT TO BUY AT AUCTION - WHAT DO I NEED TO KNOW?

Mickleson says things get a little more complicated if you want to buy a property at auction. Typically, a deposit is payable on the day and is usually 10% of the purchase price of a home, but a KiwiSaver withdrawal takes around 10 working days to process which means the money may not be available.

Alternatively, Mickleson says you can use your KiwiSaver on settlement, or you could try and negotiate a ‘variation’ before the auction with the vendor which will allow you to pay your deposit once your KiwiSaver funds have cleared.

“It's really important that you seek the right advice from lawyers and real estate agents because it is very case by case. What you can look to do is that when you get pre-approval from the bank, you can have your KiwiSaver balance as part of that approval.”

“We just need to make sure that you are able to access those funds should you be successful at the auction, so it's about having everything lined up. Then if you’re successful, then we can pull the trigger with it.”

ARE THERE ANY OTHER RULES THAT MIGHT CATCH ME OUT?

Mickleson says things can get tricky when it comes to family or parental assistance.

“For example, if your parents are subdividing their property and gifting you a plot of land, then technically you become property owner without using your KiwiSaver. That means you can’t then access your KiwiSaver to build the property because you already own it and for second chance rules to apply you can’t have it in your possession.”

“Whereas if you were to buy a house and land package as the first position, it can become possible.”

You also can’t use your KiwiSaver to just buy land, you need to have plans and intent to build on it in the future.

“If you are buying land now and have no plans for the building then the two are separate purchases. The land ownership will exclude you from being able to use your KiwiSaver for the build under second chance withdrawal. There are a lot of rules around intent.”

He also says it’s essential to understand whether your purchase involves Māori land.

“You can use your KiwiSaver for this, but you need evidence of your right to occupy the Māori land; and a copy of a building contract which is an agreement for sale and purchase of your interest in the house that is being built. The contract must show you as the purchaser and name the land that the build is happening on.”

Using your KiwiSaver to buy a home is a powerful tool, but it’s important to navigate the process carefully. Seeking professional advice from a mortgage broker, financial advisor, or KiwiSaver provider can help you make informed decisions and avoid potential pitfalls.

To find out more you can talk to the team at Generate KiwiSaver.