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Kiwisaver as deposit for first home

Lately, more and more clients have been approaching us hoping to use their Kiwisaver money as part or all of their deposit for a first home purchase. Which is really great to see. But often, they are confused as to what they can access.

If you want to use Kiwisaver money as your deposit, there are actually two parts to think about.

Part one is the first home withdrawal.

This is where you can take out all of the money you’ve put in, all the money your employer has put in and the interest earned on everything. You cannot withdraw any money put in by the government (ie the $1000 kick-start must stay put). To find out how much you can get out just make contact with your Kiwisaver scheme.

Part two is the first home buyer’s subsidy.

You can get up to $5000 in addition to the first home withdrawal, above. The way it works is that you can get $1000 for every year you’ve been contributing to Kiwisaver, must have been in 3 years, can’t get more than $5000. Your income has to be below certain thresholds (eg combined income for couples must be less than $100,000) and your proposed purchase price is subject to location based caps (eg in Auckland the house has to be under $400,000). To find out whether you’re eligible you need to contact Housing NZ.

The good news – is that you may be eligible for both parts.

The really good news – is that if you’re buying with someone else (partner, brother, friend etc) and both of you are eligible then you can double up and combine the subsidy and withdrawal to make a really decent deposit.

Hope that sorts out any confusion!

The truth about low deposit mortgages

You may have noticed that banks have become more flexible in their lending policies especially for borrowers whose deposit is less than 20%. In fact, you may have even seen some advertising on TV (Westpac) or on Facebook targeting first home buyers (ASB).

While the banks are certainly lending to people with low deposits (thats anything less than 20%) there are some tricks and additional costs for borrowers in this category – ever heard the term ‘lending creiteria apply’?

Sure, you’ve got to have good income, have saved your deposit and clean credit; everyone knows that. But let me tell you, there’s more to it than that.

In fact, we’re thinking of writing a short paper titled along the lines of ‘the truth about low deposit mortgages’ to help you understand exactly what we do to present you in the best light to a bank. Let us know if you’d be interested in reading that by flicking us a quick email to [email protected] with the subject line “mortgage truths”

 

$18,000 house deposit – thanks Kiwisaver!

I’ll cut straight to it – if you’re not in Kiwisaver yet (or an equivalent scheme), somethings wrong with you.

Although thousands of people have signed up there is still a group of people who seem paranoid about getting into it. In terms of simplicity it’s a good scheme. That a heap of people who probably weren’t doing anything about their retirement have been spurred into action also makes it a good scheme. As an employee, for every dollar you put in someone else adds another dollar fifty (roughly). And you get $1000 for signing up. What’s not to like?

But the really fantastic part of the scheme in our opinion is the first home buyer subsidy. It’s a massive benefit to anyone who aspires to property ownership. Is that you?

It works like this:

If you have never owned a home*, you can withdraw some of your Kiwisaver funds to help pay the deposit so long as you have contributed to the scheme for at least 3 years. You get $1000 for every year you contribute starting at $3000 up to a maximum of $5000.

You can also take out your own contributions, your employer’s contributions and the interest earned on the lot and put it toward your first home. You can’t touch the government contributions though and there are house price and income thresholds to consider too.

How about some numbers to see how much you’re looking at?

Let’s say you earn $50,000 before tax per year and contribute 2% towards Kiwisaver.

Your annual contributions will be about $1000. Your employer matches this, so add another $1000.

If you’ve been contributing for the minimum three year period that’s $6000 of your own money available for a house deposit. Now add the subsidy of $3000 which gives a total of $9000 for your deposit. Not bad, but here’s the really cool bit.

Most people buy a house with their spouse or partner. If that person has also been in Kiwisaver for three years you can ‘double up’. And if their numbers are just like yours (above) you’ve got a deposit of $18,000!!!

Home ownership might be a whole lot closer than you first thought. Find out if you’re eligible for a first home subsidy and how much you can get by going here. Then call us to arrange for your mortgage pre-approval on 0508 462 489.

*In fact, it may be possible to access the subsidy even if you have owned a home before.

 

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