Using KiwiSaver to build your home
With the KiwiSaver HomeStart Grant you are eligible for up to $10,000 as an individual, or $20,000 as a couple, to help your build. The grant is calculated at $2,000 per year with the minimum contribution period being 3 years.
Kiwisaver Home Start Grant
- To be eligible for the Home Start grant, Kiwisaver members need to contribute the minimum percentage of their total income (currently 3%) for at least three years to their Kiwisaver scheme, complying fund or exempt employers fund. Members are required to contribute regularly in each of the years that they are making payments, however contributions do not need to be consecutive in order to qualify for the Home Start grant.
- It must be your first home and you cannot have received the Home Start grant before
- For a sole purchaser you need to have earned $85,000 or less gross in the last 12 months
- For two or more purchasers you need to have earned $130,000 or less gross in the last 12 months
- Minimum deposit is 10% or more of the purchase price – it can include the Kiwisaver withdrawal, Home Start Grant, savings, and gifts from relative. Type of property needs to be – fee simple, stratum estate (freehold and leasehold), cross-lease (freehold and leasehold), leasehold, or Maori land
Purchase price caps for Christchurch City, Selwyn District, and Waimakariri District are:
Existing property - $500,000
New property - $550,000
- A home that has received it’s building code of compliance certificate fewer than 6 months before Housing NZ received a Kiwisaver Home Start grant is considered a new home – it must be related to the home as a whole, not only some building work completed.
- Relocating existing/older property is not considered a new home, it may be eligible for the grant of between $3,000 and $5,000
- If property is purchased off plans the grant may be paid out prior to settlement to assist with the initial payment or progress payment required as stated in the agreement. This is best discussed with solicitor early on as there are conditions on this
- Housing NZ requires at least 20 working days from receiving an application through to paying out the Home Start grant.
- It is best to obtain pre-approval for the grant early on (either before or when completing finance pre-approval) as to make this process as smooth as possible once you have a contract on a property. Pre-approval lasts 6 months for the Home Start Grant.
Level of grants are:
Purchase of existing property:
3 yrs of contributing = $3,000 (min you can get)
4 yrs of contributing= $4,000
5 or more years contribution = $5,000 (max you can get)
Purchase/build of a new property:
3 yrs of contributing = $6,000 (min)
4 yrs of contributing = $8,000
5 or more years contribution = $10,000 (max)
- When buying land to build on you need a signed purchase agreement for the land (it cannot have settled), a signed fixed price contract, have funding approved for the construction of the home. The land plus build cost must also be within the house price caps and the grant must be used towards the land purchase not the build costs.
- First home buyers can essentially apply to withdraw everything except the government $1000 kick start they received at the start of their Kiwisaver
- Your withdrawal includes: member contributions, employer contributions, returns or investments received, and any member tax credits
- Key requirements are that you have been a Kiwisaver member for three or more years and it has to be for your first home – not a investment property
- If you have owned a home before you can apply for a second chance withdrawal through Housing New Zealand. You essentially need to prove you are in the same financial position as a first home buyer
- For home loan pre-approval all that is needed is confirmation from your Kiwisaver provider of how much you can withdraw – this is easily obtained by phoning your Kiwisaver provider and they will email you or send a letter confirming the amount
- Your solicitor will assist with completion of the required paperwork to be sent to Kiwisaver in time for settlement of your property
Welcome Home Loan
- This is offered by a range of lenders, is underwritten by Housing New Zealand and you can apply for pre-approval
- Minimum deposit required is 10% of the purchase price
- You can utilise your Kiwisaver withdrawal and Home Start Grant (if eligible) towards your deposit
- Combined household income cap for sole purchase is $85,000 or less gross in the last 12 months, two or more borrowers cap is $130,000 or less gross in the last 12 months
- Purchase price cap is the same as the Home Start Grant for new or existing property
- You must live in the property, cannot own another property, and there will be a 1% Lender’s Mortgage Insurance premium (can potentially be added to your loan) along with a possible application fee from the lender. You must also be a New Zealand citizen or permanent NZ resident
- Key component is that the Welcome Home Loan is exempt from the Reserve Bank of New Zealand lending restrictions introduced on banks in 2013 for clients with less than 20% deposit. It therefore is potentially easier (subject to a full application with the lender and Housing NZ) to obtain a pre-approval for your first home purchase.
Please note: above information is intended only as an overview of the Kiwisaver withdrawal scheme, Home Start Grant scheme, and the Welcome Home Loan. There may be further terms and conditions relating to your Kiwisaver withdrawal, Home Start Grant application, and a Welcome Home Loan application. Lenders criteria, terms and conditions applies to the Welcome Home Loan application. Information correct as of 27th March 2017 and may be subject to change.