How KiwiSaver can help you buy your first home
It may be intended as a way to help you save for retirement, but getting a chunk of cash in your KiwiSaver account can also help you buy your first home.
Nick Stanhope, ASB's executive general manager wealth and insurance, says the amounts of money some people have accumulated in their KiwiSaver schemes can come in very handy for first home buyers.
"People get really surprised by how quickly it adds up. Based on the fact it comes out of their wages every week or salary every fortnight, their employer also contributes and the market performance has been strong over the last couple of years, it adds up. So customers who can view those balances in their internet banking platform look at it and go: 'Wow. How did that happen?'"
In the last financial year ending March 31, more than 2500 ASB KiwiSaver scheme members withdrew $29 million for first home purchases an average of $11,600 each, Stanhope says. The amount of money is getting bigger because people have been in the scheme longer, and there are more people taking advantage of the opportunity.
Although KiwiSaver can be used to help buy a first home, there are a few conditions.
Firstly, you need to have been in the scheme for more than three years to be eligible to take money out, Stanhope says.
And it can only be used to buy your home and not an investment property - so you need to be planning on living in the house yourself.
Stanhope says it's also crucial to realise that you can't use all the money that is in your KiwiSaver account.
"You can only withdraw what you contribute, what your employer contributes and any returns from your investment. You can't take out the kickstarter amount or the annual government contributions that are made," he says.
First home buyers should also be aware that their KiwiSaver provider may need at least 10 days to process the withdrawal.
"That is particularly important because if you find yourself in a situation where your house actually settles and you don't have your KiwiSaver money, you can no longer use that money or make that withdrawal, as you are deemed to own the house," Stanhope says.
Additionally, KiwiSaver contributions cannot be used to make the deposit to the real estate agent you need to find the money to pay the agent as the withdrawn amount is paid directly to the solicitor and goes through settlement.
This ensures the money actually goes towards buying the house and is not used in any other way.
ASB has a handy guide that explains how you can use KiwiSaver to buy your first home and what you need to know about the Housing New Zealand first home deposit subsidy.