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Myth vs Fact: Using KiwiSaver to purchase a house

10 April 2019

Buying a home is something that many New Zealanders dream of.

First Mortgages NZ Ltd have helped hundreds of clients purchase their first home using KiwiSaver.

There are many misconceptions about using KiwiSaver to purchase your first home. Many of our clients come to us confused, misinformed and unsure of where to begin.

Take a look at some of the myths we have been able to overturn.

Myth: You need to have your KiwiSaver at the same bank from which you get your mortgage.

Fact: This is not true at all. You can make applications to a variety of lenders, regardless of where your KiwiSaver is kept.

Myth: It is better to keep your KiwiSaver contributions in an aggressive or high growth account in order to earn as much as possible for a larger deposit.

Fact: If you are wanting to purchase a house within the next three to five years, it is better for you to keep your funds in a safer, lower risk fund in order to maintain the balance of the amount that you have in your account.

Higher risk funds can cause your balance to dip or rise significantly at any given time, causing uncertainty at the time when you are need to withdraw the funds and use for them your deposit.

Myth: I have been with KiwiSaver for a very long time, I definitely meet the criteria for a HomeStart Grant.

Fact: There is a difference in eligibility requirements when it comes to KiwiSaver withdrawal and the HomeStart Grant. KiwiSaver requires you to have been a KiwiSaver member for a minimum of three years whilst the HomeStart Grant requires you to have been actively contributing for a minimum of 36 months in total.

Myth: I need to have been contributing to my KiwiSaver fund without a break in order to qualify for the HomeStart Grant.

Fact: You can combine all active periods over the course of your membership in order to meet the 36-month minimum threshold.

Myth: You can only access your KiwiSaver funds if you have NEVER owned a house before.

Fact: The truth is, you may qualify for a “Second Chance Withdrawal” which allows you to access government assistance even if you have owned a house before.

Myth:  I don’t have enough in my KiwiSaver fund to use towards a deposit.

Fact: This may be true, but there are other sources of money that you can access and combine with your KiwiSaver funds to use towards a deposit; such as personal savings, selling assets, the HomeStart Grant and financial gifts from friends and family.

If you want more information around your eligibility to withdraw your KiwiSaver and the HomeStart Grant, gain clarity on the mortgage application process or set goals towards purchasing your first (or second) home, call or text us on 021 0295 6499.

Tim Oliver is an Authorised Financial Adviser and director of First Mortgages NZ Ltd and Oliver Financial Planning Ltd. The information provided in this article is not intended to constitute advice to any person.


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