KiwiSaver has almost two million members. As at 1 May 2012, approximately 340,000 of those members were aged between 25 and 34. One of the advantages of KiwiSaver for this age group and others who are in the first home market is the schemes to assist first home buyers. Members can apply for a first-home deposit subsidy of up to $5,000.00 and can withdraw all or part of their savings to put towards their deposit.
KiwiSaver First Home Withdrawal
- First home buyers can withdraw their KiwiSaver savings to use towards a deposit for a first home or to purchase land to build their first home on.
- To withdraw these savings you need to have been a KiwiSaver member for three years or more. Personal contributions, employer contributions and interest can be withdrawn, only the $1,000.00 kick-start and annual tax credits must stay in the account.
- Statistics show that most individuals have been withdrawing between $9,000.00 and $20,000.00 depending on how long and how much they have contributed to the scheme (this is likely to provide a decent chunk of a first-home deposit).
- One of the important things to be aware of is that all KiwiSaver providers have different time frames. Some take up to six weeks to release the funds to your solicitor – so it is a good idea to start the application as soon as you start house hunting!
KiwiSaver First-Home Deposit Subsidy
- As well as making the most of the KiwiSaver first home withdrawal, first home buyers can also utilise the KiwiSaver first-home deposit subsidy if they meet the criteria. The criteria is set out below and you can apply for a pre-approval to find out if you are eligible before you start house hunting.
- The eligibility criteria is as follows:
- You must have contributed the minimum to KiwiSaver for three years. The minimum is currently 2% of your total income.
- You must buy a house for $400,000.00 or less in Auckland, Wellington or Queenstown, or $300,000.00 or less elsewhere.
- You must have a combined yearly income of $100,000.00 or less (before tax) for one or two buyers, or $140,000.00 or less (before tax) for three or more buyers. This is only calculated on your income in the 12 months prior to your application.
- It needs to be your only house and you need to live in it for six months after completing the purchase.
- If you are building a house it must be completed, with a code of compliance, within 12 months of purchasing the land.
- If you are eligible, the subsidy itself is a payment of $1,000.00 for each year of contribution, up to a maximum of $5,000.00. This means individuals receive between $3,000.00 and $5,000.00 so a couple can have a combined subsidy of up to $10,000.00 to put towards their deposit.
Previous home owners and individuals who are members of a complying or exempt employer scheme may also be eligible for these features.
Other Home Ownership Assistance
Welcome Home Loan – Low or No Deposit Home Loan
This is a loan designed for first home buyers who are lacking a deposit. In the six months prior to May 2012, 684 loans had been settled.
- It means that you can borrow:
- Up to $200,000.00 without a deposit.
- Between $200,000.00 and $280,000.00 with a deposit of 15% of the amount above $200,000.00. For example, on a loan of $280,000.00 a deposit of 15% of $80,000.00 is required, which is $12,000.00.
- You can borrow up to $350,000.00 in higher priced areas such as Auckland, Wellington and Queenstown with a deposit of 15% of the amount above $200,000.00.
- To qualify you need to have a combined household yearly income of $85,000.00 or less (before tax) if there are one or two income earners. For three or more income earners, the combined household yearly income of $120,000.00 or less (before tax).
- It needs to be your first home, you need to live in the home and not own any other properties.
Please direct any enquiries to:
Paige Devereux at our Auckland Office on (09) 306 6724 ( firstname.lastname@example.org)
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This article is published for general information purposes only. Legal content in this article is necessarily of a general nature and should not be relied upon as legal advice. If you require specific legal advice in respect of any legal issue, you should always engage a lawyer to provide that advice.