For many prospective first-time home buyers, the process of saving a deposit can be a fairly long and tough road. With house price still at record highs, particularly in our major cities, many prospective buyers may feel it’s a little out of reach.
But that may not be the case. Remember, if you have a KiwiSaver account and have been contributing to it on a consistent basis for over three years, you are entitled to tap into that fund and put it towards getting your foot in the door.
KiwiSaver is a tool that has helped numerous prospective first-time buyers secure their own home. If you are considering tapping into your KiwiSaver fund, here are a few things you need to be aware of.
Allow yourself enough time before settlement
If you are relying on using your KiwiSaver to securing your new home, make sure you leave ample time for the funds to clear. If you are using your KiwiSaver to purchase a home, you will need to factor in the time it will take for your KiwiSaver provider to complete all their administrative tasks.
We recommend you account for several weeks between the day you sign the contract and settlement day, just in case there are any unexpected hold-ups.
What happens if you don’t have it?
If you do get to settlement day and your KiwiSaver provider hasn’t cleared or approved the use of the funds, you will not be able to use it; regardless of how much you have tucked away.
To avoid this, make sure you take all the appropriate steps to ensure you have access to the funds, including, filing the paperwork as soon as possible and working with the vendor to plan settlement several weeks in advance.
Calculate your deposit without your KiwiSaver
One of the best ways to avoid the heartache of not having your KiwiSaver available on settlement day is to calculate your deposit and what you can afford, without your KiwiSaver.
If you are relying on it, you are ultimately leaving your fate in the hands of your provider. However, if you are able to save a nice deposit without factoring in your KiwiSaver, you’ll be in a very strong position to ensure you are able to purchase a home.
You must live in the house
Now, this is an absolute must, and if you are found to be breaking the rules, you may face some fairly harsh punishments.
If you use your KiwiSaver to purchase a home, that house must be your primary residence for a minimum of six months. After this time, you are able to rent out the house if you wish.
Increase your contributions
If purchasing a house is a long-term goal you are working towards, it’s a great idea to improve your chances by boosting your voluntary contributions. Remember, you are able to contribute as little or as much as possible. Obviously the more you are contributing the faster you will be able to build up a decent amount to put towards a deposit.
Combine with your partner
Are you and your long-term partner looking to move out of the rental market? If so, remember, you are able to combine your KiwiSaver funds. This is a great way for couples to get their foot in the door, especially in the extremely competitive housing market of today.
An added bonus of combining your funds, is you are able to draw as little or as much as you want from either fund, depending on the amount available to each party.
Previous homeowners can still access their KiwiSaver
If you have previously owned a home, regardless of how long ago or for how long, you may still be eligible to have access to KiwiSaver to purchase a new house provided you don’t own or share in another property at the time of your application.
There are conditions around this so best to seek advice if this situation applies to you. The last thing you want to happen is to anticipate using your KiwiSaver to jump back onto the property ladder, only to find that you are unable to use your KiwiSaver again.
KiwiSaver is a great initiative that is aimed at helping people get their foot in the door and secure their own little piece of the Kiwi dream. If you are considering using your KiwiSaver to put towards buying a house, get in touch with us today and we can help you understand your position and what is required from you.