If you’re buying or thinking about buying a first home, and you’re contributing to a KiwiSaver scheme, you may be able to access financial assistance. But you’ll need to check carefully whether you, and the property, are eligible and establish how much you can get before you make a commitment. Our dedicated Home Loan Advisers can help you do this.
These schemes were intended by the government to be a “hand-up” to help first-time buyers into home ownership, so if you’re a high income earner or you have substantial assets, it’s unlikely you’ll qualify.
If you’re not, here’s a list of five things you’ll need to look for.
What can I get?
You may be able to get a HomeStart grant, administered by Housing New Zealand, and/or make a first-home withdrawal from your KiwiSaver account. HomeStart provides eligible first home buyers with grants of up to $5,000 (for individuals) or $10,000 (couples, or you and another individual or individuals) to buy an existing home. For a brand-new home, land to build a new home, or even buying off-the-plans, an individual may be able to get up to $10,000, or $20,000 for a couple.
Who is eligible?
You have to be at least 18 years old, you have to be a KiwiSaver member, and you have to have earned no more than $80,000 in the last 12 months ($120,000 for couples, or two or more people). You need to have contributed at least the minimum allowable percentage of your total income – currently 3% – to a KiwiSaver scheme for 3 years before you can make an application. For a HomeStart grant you’ll need to be able to come up with at least 10% of the purchase price as a deposit. If you’ve already owned a home, all is not lost; you can apply for a grant provided you are “in a similar financial position to a first home buyer.” That means your “realisable assets” – cash, deposits, shares, even a boat or a caravan – can be worth no more than 20% of the regional “house price cap.” So $110,000 for Auckland, $90,000 for other cities and regional centres, and $70,000 for the rest of New Zealand.
In some situations if you have owned a home before, you may be able to make a withdrawal, if Housing New Zealand accepts that you are in the same financial position as would be expected if you have never owned a property in the past.
What can I buy?
The property itself has eligibility criteria. The ownership form has to be “fee simple”, “stratum estate” (freehold or leasehold), “cross-lease” (freehold or leasehold), or multiple-owned Maori land. In addition you have to live, or intend to live, in the property for at least 6 months after settlement. And there are maximum valuation criteria, or “house price caps.” These are currently $550,000 for Auckland; $450,000 for Wellington, Christchurch, Hamilton, Tauranga and other provincial centres, and $350,000 for the rest of New Zealand. If you’re buying land to build on, or off-the-plans from a developer, you’ll need to check, as some specific criteria apply.
How much can I get?
For HomeStart grants, see above for the maximums. For the first-home withdrawal scheme you’ll need to ask your KiwiSaver scheme provider how much you can get. The amount you can withdraw includes your own KiwiSaver contributions, your employer’s contributions, member tax credits, and any investment gains your scheme has made since you started contributing.
How much deposit will I need? As mentioned, you’ll need at least 10% of the purchase price. But that includes the HomeStart grant itself, and any amount you can withdraw from your KiwiSaver scheme as a first home withdrawal.
You must leave at least $1000 in your AMP KiwiSaver Scheme account after the withdrawal, even if you have not received a $1000 kick-start contribution.
If this fits the bill you can move onto the next step and make your application/s. But do check the small print. The Insurance & Savings Ombudsman has reported, for example, some complaints from applicants turned down because their applications were received after the purchase was settled – so it make sense to get your application in as soon as possible after the relevant sale documents have been signed.
The views and opinions expressed in this article are intended to be for general purposes only. To the extent that any of the above content constitutes financial advice, it does not constitute personalised financial advice for an individual client under the Financial Advisers Act 2008.
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