KiwiSaver first-home withdrawal: Your questions answered

Answers to common questions about the KiwiSaver first home withdrawal.
Answers to common questions about the KiwiSaver first home withdrawal. Photo credit: Getty.

First-home buyers wanting to take advantage of the KiwiSaver first-home withdrawal should allow up to 15 working days for their application to be processed, experts say.

And those who haven't applied before may still be eligible, if the home they're buying isn't their first.

Following Newshub stories about first-home buyers using their KiwiSaver towards a deposit, some readers told us the application process took longer than they thought. Others questioned whether they could still withdraw funds if they weren't buying a first home.

As KiwiSaver can be a great help to Kiwis wanting to get onto the property ladder, Newshub asked two KiwiSaver experts for answers to these questions and more.

Q1. How much money can I take out?

Clive Fernandes, director of KiwiSaver advice provider National Capital, says KiwiSaver members can apply to withdraw most of their savings - but must leave $1000 in their account.

"With some exceptions, you can withdraw your contributions, the contributions made by your employer and the Government, as well as any interest you have earned, but you must leave $1000 in your account," Fernandes says. 

Q2. How do I start the application process?

The first step is for KiwiSaver members to check they're eligible.  

KiwiSaver members have to have held their KiwiSaver for at least three years and intend to live in the home for at least six months.

"Before doing anything else, a first-home buyer will need to confirm their eligibility with their provider, then request a withdrawal form," Fernandes says.

Prospective buyers generally have a builder (to complete a building report) and solicitor lined up and speak to their bank before putting offers in. In most cases, the bank or lender will ask for a letter indicating their KiwiSaver balance.

Eachann Bruce, KiwiSaver adviser at Milford Asset Management said members can ask their KiwiSaver provider for a withdrawal application, then work with their provider and solicitor to understand the process and prepare the paperwork.   

"Generally someone will have a property in mind, they'll get the withdrawal form to know what sort of documentation is required, then talk to their solicitor," Bruce says.

As part of the application, members are asked to provide a statutory declaration proving they intend to live in the home for at least six months.

Q3. How long does it take to process the application?

This depends on the KiwiSaver provider - after completing the application, members should allow up to 15 working days.

"Applying early is recommended - it can take up to 10 working days to process an application for most providers - some may take up to 15 working days," Fernandes says.

"If approved, payments of the funds will be paid to the solicitor on or before settlement day."

Bruce said Milford Asset Management took five working days to process applications. To prevent processing delays, members should also allow a couple of days to complete their application and check it with their KiwiSaver provider and/or solicitor first.

A signed Sale and Purchase Agreement is required to release the funds.

Q4. My application is taking a long time to approve - what could be the hold-up?

Incorrect paperwork is the most common reason for delays in processing applications.

"Ensuring all the required forms, documentation and approvals are in order is crucial to not slowing the process down," Bruce says.

Members should talk to their KiwiSaver provider and solicitor to check they've got the required documents, ensuring they allow enough time for processing before the property settlement date.

Q5. I'm buying a home for the second time - am I eligible for the KiwiSaver first-home withdrawal?

KiwiSaver members who are previous homeowners, haven't withdrawn their KiwiSaver funds and aren't currently property owners (or have any interest in a property) may be eligible. Kāinga Ora also requires members to be in a similar position to a first-home buyer (guidelines can be found here).

"Kāinga Ora determines whether the member is in the same position as a first-home buyer, and if so produces a letter confirming this," Bruce says.

"The member will then be able to take this to their KiwiSaver provider to assist with the application to withdraw their KiwiSaver."

As KiwiSaver providers don't have any influence over second-chance withdrawals, members are encouraged to contact Kāinga Ora to check they're eligible before discussing next steps.

In December 2020, 4790 KiwiSaver members withdrew their savings to buy a first home - 42,000 in the June 2020 financial year. 

More information about the KiwiSaver first-home withdrawal can be found here