Buying First Home - Deposit/Kiwisaver Question

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Forums › Finance and wealth management › Buying First Home - Deposit/Kiwisaver Question

Cambo

107 posts

Master Geek

#190920 16-Jan-2016 14:50

Me and my wife are looking at buying our first home this year. I think I am fairly researched in Kiwisaver, as I have been involved in my own investment direction, and I also work at IRD. We both have just over $30k each surrender-value from our Kiwisaver provider (confirmed in writing), should be eligible for most, if not all, the Housing NZ First Home Grant, and while we are not huge earners, we have a healthy amount of disposable income so can easily afford a mortgage. We are seeing a lender on Monday. One of our friends, who is a chartered accountant, and who is getting a house built, told my wife that we can't use Kiwisaver for a deposit. I am fairly certain she is wrong. We only recently got married, so are re-building our savings.
Is anyone aware of any circumstances where a lender won't accept Kiwisaver funds for a deposit for a first home?

Thanks.

plod

272 posts

Ultimate Geek

#1472636 16-Jan-2016 15:06

A deposit to hand over to agent. Then no. Done this 2years ago and it isn't a issue. Funds will be released on settlement through the lawyers. So a deposit to hand to estate agent no. Agents are aware how kiwisaver works.

Geese

1028 posts

Uber Geek
Inactive user

#1472668 16-Jan-2016 15:44

Yes you can use it either as the (usually 10%) deposit given to real estate agent on going unconditional, or used at the end to go towards settlement - in other words - towards the 20% deposit requirement given by the bank.

plod

272 posts

Ultimate Geek

#1472684 16-Jan-2016 16:03

Welcome home loans accepted just kiwi saver and first home subsidy. None of our own savings went into it. Best talk to one of the first home lenders. Kiwi bank, nz home loans and others

Cambo

107 posts

Master Geek

#1472691 16-Jan-2016 16:18

Yeah we are seeing NZ Home Loans because they seem better than regular lenders because of how they structure it all, even if they have slightly higher interest rates.
I am pretty sure we will be fine, but it's good to check with others who have done it before.

andrewNZ

2487 posts

Uber Geek
Inactive user

#1472697 16-Jan-2016 16:47

Plod is correct. It is a deposit to the bank, but not to the vendor.

It may be different if you have enough other savings to cover the deposit to the bank.

Went through it @6 years ago when it was just becoming a thing. The vendor had no issues with not getting a deposit, probably due to the fact we had very few conditions.

mattwnz

20141 posts

Uber Geek

#1472703 16-Jan-2016 17:07

The accountant is partly right. But I believe it all depends when you actually pay the deposit, and when it settles. This is because I believe kiwi saver isn't paid to your solicitor until it settles. With some contracts you can pay the deposit upon settlement, which can be the same date as it going unconditional if you want. You can write that into your contract if it isn't in it, although the vendor may not agree. Depends on how good the contract is for them, they just maybe happy that they got a good price with few conditions. The agent however won't like this, because they get paid when it goes unconditional, and that usually comes out of the deposit you pay, so the vendor in that case would need to pay them out of their money, as they won't have had the deposit by that stage. As the buyer, you can make the rules when it comes to the contract, the seller can either go along or not.

Geese

1028 posts

Uber Geek
Inactive user

#1472736 16-Jan-2016 17:28

andrewNZ: It is a deposit to the bank, but not to the vendor.

No, it is possible to use KiwiSaver funds for a deposit on a first home before settlement, ie once conditions are met for going unconditional.

So it can be a deposit for either.

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mattwnz

20141 posts

Uber Geek

#1472743 16-Jan-2016 17:37

Geese:
andrewNZ: It is a deposit to the bank, but not to the vendor.

No, it is possible to use KiwiSaver funds for a deposit on a first home before settlement, ie once conditions are met for going unconditional.

So it can be a deposit for either.

No I don't believe that is the case, at least not an an existing /older houses, as per the Housing NZ website http://www.hnzc.co.nz/buying-a-house/KiwiSaver-helping-you-into-home-ownership/kiwisaver-homestart-grant/homestart-faq

I am buying an existing property. Can the KiwiSaver HomeStart grant be paid as part of the depositI need to pay to the real estate agent handling the sale?

Unfortunately, no. For the purchase of older/existing properties, the earliest the HomeStart grant can be paid is on the morning of the property settlement.

The OP hasn't said if they are buying new off the plan or an existing house, but I would presume it will be an exisiting one, as it is a first home, and new homes are normally more.

Geese

1028 posts

Uber Geek
Inactive user

#1472746 16-Jan-2016 17:42

mattwnz: No I don't believe that is the case, at least not an an existing /older houses, as per the Housing NZ website http://www.hnzc.co.nz/buying-a-house/KiwiSaver-helping-you-into-home-ownership/kiwisaver-homestart-grant/homestart-faq

No you are getting confused between the two, and I don't blame you as they keep altering the names of things and make them all sound similar. This is an extremely frustrating experience for all first home buyers, with ultra fine print tripping up those who read the website and think their quids in when they tick all the boxes, but don't because there is a few hidden traps.

The HomeStart grant is only paid upon settlement. Correct. But I said Kiwisaver funds...

The Kiwisaver first home withdrawal, from 1 June 2015, can be used to make the initial deposit to vendor or the agent/solicitor upon meeting the conditions/going unconditional.