Traps for KiwiSaver Home Buyers

Traps for KiwiSaver Home Buyers

One of the best incentives for young people to join KiwiSaver is the ability to withdraw funds for the purchase of a first home. All but $1,000 can be withdrawn providing certain criteria are met. You need to have been a KiwiSaver member for at least three years and you must not have owned property before unless special circumstances apply. A Home Start grant of up to $5000 per person for an existing house and $10,000 for a new house is also available if your income and the value of the house you are buying are within certain limits, and you may also be eligible for a Welcome Home Loan, for which you only need a 10% deposit.

There are some traps to watch out for. If you purchase or inherit a piece of land on which to build a house, after that time you will not be a first home owner and you will not be able to withdraw your KiwiSaver funds. Funds transferred into your KiwiSaver from an Australian superannuation scheme are not available to purchase a house. To be eligible for a Home Start grant, you need to have been a contributing member of KiwiSaver for three years or more. If you stop work, for example by going on maternity leave, you may need to keep up contributions at a reasonable level to stay eligible. This can be done by contributing $20 a week directly to your KiwiSaver fund. It can take up to a month to process a Home Start grant and it is best to apply for a pre-approval for both the Home Start grant and Welcome Home Loan to make sure you are eligible. The pre-approval will last for six months, giving you time to find house with the knowledge that you have finance available.

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