News
Accessing KiwiSaver funds for purchasing a first home
Message from the Banking Ombudsman, Deborah Battell
15 February 2011
Many investors have now been making contributions to a KiwiSaver scheme for three years and may be contemplating putting these contributions, and those of their employers, towards buying their first home.
The Banking Ombudsman is concerned that the public may not be aware of an important condition of KiwiSaver schemes: that the funds received from the KiwiSaver withdrawal are to be paid to the vendor, through the member’s solicitor, as part of the purchase price on settlement.
Property buyers cannot borrow from elsewhere in the meantime and repay that borrowing with KiwiSaver funds after settlement. Nor can they use the funds after settlement for making their mortgage payments.
“Customers have a one-off opportunity to access their KiwiSaver funds for the purchase of a property, and if they do not follow the correct procedures, they will lose this opportunity,” Ms Battell said.
Customers also appear to be confused about whether they can put their KiwiSaver funds towards the deposit on a property. As the funds must be paid to the vendor on settlement day, they can not use it to pay the real estate agent’s deposit. This generally means that first time property buyers must have saved at least this deposit, usually 10% of the purchase price, before they can go ahead with the purchase.
Ms Battell strongly urges anyone contemplating putting their KiwiSaver funds towards the purchase of a first home to contact their financial service provider well in advance to ensure they understand all the terms and conditions.
As first home buyers may also wish to access the first home subsidy, she also recommends that they visit the Housing New Zealand website www.hnzc.co.nz or contact them on 0508 935 266 to discuss their requirements.