When you are buying your first home you need all the help you can get and this is where being able to use KiwiSaver withdrawals and HomeStart Grants can make a huge difference.
The problem for many people is knowing what you can access.
KiwiSaver Withdrawals
KiwiSaver withdrawals are a relatively simple concept.
If you have been contributing for a minimum of 3 years into your KiwiSaver account and have never owned a house before, you are probably able to withdraw all of your money (except the $1,000 you may have received from the government when you started).
There are a few exceptions if you’ve previously owned a house, for example – but the large majority of first home buyers fall into this category… more than 3 years… first home… then you’re eligible to withdraw your KiwiSaver funds.
There is no maximum income or purchase price on the new home for a KiwiSaver withdrawal (unless under 2nd chance criteria) but there is for any HomeStart Grants.
The HomeStart Grants
This grant was setup to help boost first home buyers into the market by giving them extra money to put towards their deposit.
There is some criteria with Housing NZ that you need to be aware of but the two major things that you need to know and may limit your ability to use a HomeStart Grant are income and maximum purchase prices.
Maximum Incomes
There are maximum incomes in place for those that want to access the HomeStart Grant which are;
- For sole buyers an income of $85,000 or less (before tax) for the last 12-months.
- Where there are two or more buyers a combined income of $130,000 or less (before tax) for the last 12-months.
It’s important to understand that this is your taxable income over the last 12-months not your current annual salaries. You can go to the IRD website and check what your taxable income was on your myIR services as this is what is used by Housing NZ.
Maximum Purchase Price for HomeStart Grant
The maximum purchase price differs depending on whether you’re buying an existing property or a new property.
- Auckland – $600,000 for an existing house, or $650,000 for a new house
- Other major towns and districts – $500,000 for an existing house, or $550,000 for a new house
- Rest of NZ – $440,000 for an existing house, or $450,000 for a new house
A new property is defined as having the Code of Compliance issued within the last 6 months.
If you have any questions you can either check the criteria on the Housing NZ website or contact a mortgage adviser.
Will KiwiSaver Withdrawals and HomeStart Grants Change?
I’m sure that over time the use of KiwiSaver withdrawals and HomeStart Grants will change, but at this stage they haven’t so we need to use what we have got.
Prior to the election the National Party had agreed to increase the HomeStart Grants in January 2018 but as they are no longer in Government we expect that this is not happening, and at this stage the new Labour led coalition have not provided any detail on what they plan to do to help first home buyers.
Of course we will be watching with interest and will provide updates on the Kiwi First Home Buyers Facebook Group as well as on this website.
Getting First Home Loans Approved
It seems daunting when you are buying your first home and then borrowing such a large amount of money.
As mortgage brokers we understand that it can be quite daunting and so we are there to help you through the process. Unlike dealing with a bank, when you work with a mortgage broker you get access to a range of options from the different banks. We can also access the Welcome Home Loans which helps when you need a low deposit home loan, and there are other bank and non-bank products designed to help in various situations.
This choices that brokers have ensure that you do not end up with the wrong loans from the wrong banks.
Of course being able to use KiwiSaver withdrawals and HomeStart Grants can make a huge difference and in most cases we know when you can access these.
