By now most of us who are earning an income will have a Kiwisaver fund (if you don’t, I suggest you speak with an investments adviser to help decide whether this is a good idea for you).
Using your Kiwisaver is a popular source of deposit to buy your first home. There are a few criteria you need to meet in order to access this:
- You need to have been contributing to your KiwiSaver for at least 3 years.
- There must be at least $1,000 left in there after you have withdrawn the money to buy your home
- The money must be used to buy your first home
- The money must only be used for the purchase of an owner-occupied home i.e. it cannot be used for the purchase of an investment property.
Banks require confirmation that you are eligible to withdraw your Kiwisaver before they will provide any funding. This can be obtained through your KiwiSaver provider, but it’s a good idea to obtain this before you even start looking for a property, just to be sure that you have access to that money.
When you are buying via auction, if you win the auction you are required to pay an agreed deposit amount (usually 10% but can be less if mutually agreed beforehand) immediately.
When you apply to withdraw your Kiwisaver, it can take up to 15 working days for your withdrawal to be processed. And you cannot apply for this until you have purchased a property (either conditionally or unconditionally).
Purchasing a property at auction is an unconditional offer – which means it’s impossible to have your Kiwisaver available to pay the initial agreed deposit.
One possible way around this is that you can request from the Real Estate agent before the auction to have the vendor agree to a lesser deposit paid on the day of the auction and the remainder paid when the Kiwisaver money is available 10-15 working days later.
If you cannot have your KiwiSaver money ready in time for the deposit payment, it must be ready in time for settlement day, as this is the day when full payment for the property is due. In most cases, settlement day is more than 2-3 weeks after the purchase date anyway, which gives your more than enough time to organise your Kiwisaver withdrawal.
If ou’re wondering about whether or not you’ll be able to use your Kiwisaver for a house purchase, or whether there are any timing constraints to consider, I can help you figure that out.