Kiwisaver First Home Withdrawal and Kāinga Ora First Home Grant Eligibility
Are you purchasing your first home? Completing a Kiwisaver First Home Withdrawal and obtaining a First Home Grant from Kāinga Ora may help you get on the property ladder.
The Kiwisaver First Home Withdrawal and Kāinga Ora First Home Grant are two separate things each having their own eligibility requirements.
Kiwisaver First Home Withdrawal
To complete a Kiwisaver First Home Withdrawal you need to have been a member for at least three years. These funds must be applied toward the purchase of a residential property which you intend to live in for at least six months. If eligible, you can withdraw all your Kiwisaver savings other than $1,000 which you must keep in your Kiwisaver account.
The funds from your First Home Withdrawal may either be applied towards the payment of a deposit where you have entered a conditional agreement or towards the balance required to purchase the property on the settlement date. A withdrawal application cannot be completed until you have a signed agreement to purchase a property.
Most Kiwisaver providers take between ten to fifteen working days to process a withdrawal on receipt of your fully signed application. The amount of days your particular provider requires is set out on their respective first home withdrawal form which can be found online. Depending on whether you are wanting to use Kiwisaver funds for the deposit on the unconditional date or on the settlement date, you need to ensure that you give your provider enough time before your required date to complete the withdrawal. This can catch out first home buyers wanting to use their Kiwisaver funds to pay a deposit on a property going to auction as at auction the deposit is usually payable the same day you sign the agreement upon your winning bid.
The withdrawal forms include a statutory declaration to be signed whereby you declare that you are eligible to make the withdrawal. Only certain people can witness signing of the statutory declaration including a Solicitor, Justice of the Peace or Notary Public. These forms also include a letter to be signed by your Solicitor. It is important that you factor in these signing arrangements when determining the timeframes required to withdraw funds.
Once your application is processed by your provider, your Kiwisaver funds are paid to your solicitor. Your solicitor will then use these funds to either make payment of the deposit or towards the purchase price on settlement.
Kāinga Ora First Home Grant
To be eligible for a First Home Grant there are both income caps and property price caps which you must fall within. In the 12 months prior to your application you must have earned less than $150,000 before tax for a couple or an individual with at least one dependent and $95,000 before tax as an individual buyer without dependents. The Government recently increased house price caps effective from 19 May 2022. A table of the current price caps can be obtained from the Kāinga Ora website at House price caps :: Kāinga Ora – Homes and Communities (kaingaora.govt.nz).
For the Grant you also must have been a member of Kiwisaver for at least three years and not currently own any property. You are also required to live in the property for at least six months.
If eligible, you could receive up to $5,000 per person ($1,000 for each year up to five years you have paid into a Kiwisaver scheme) for an existing home and up to $10,000 per person ($2,000 for each year up to five years you have paid into a Kiwisaver scheme) for a new build.
Prior to entering into an agreement to purchase a property you can apply for pre-approval of the Grant from Kāinga Ora via their website. If pre-approved, once you have then entered into an agreement to purchase the property you only need to provide Kāinga Ora with relevant documents two weeks prior to the settlement date. If you do not have pre-approval, you will need to apply for the Grant at least four weeks prior to the settlement date. These timeframes should also be factored in when presenting an offer on a property as you will need to have enough time prior to the settlement date to complete your application.
Once your application has been processed, your solicitor will receive documents from Kāinga Ora which you will need to sign and have your solicitor return at least five working days prior to settlement. Like Kiwisaver funds, your First Home Grant also gets paid directly to your solicitor.
We are well experienced at dealing with both Kiwisaver providers and Kāinga Ora. If you have any questions or would like any assistance with buying your first home, please get in contact with one of our property solicitors.