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A Milestone For First Home Buyers And KiwiSaver

Contributor:
Brian Dalley
Brian Dalley

The clock is ticking and my advice to those that qualify and have time on their side, take action now.

As I explained to a reporter yesterday, the housing market is flat and as the majority of first homebuyers will be below the age of 40, they have plenty of time to build a KiwiSaver nest egg. So why not take advantage of what they already have in the pot, as there may never be a better time to do so.

KiwiSaver is now three years old and so far over 1.4 million Kiwis have chosen to secure their future by joining KiwiSaver, but that doesn’t entitle all to the first home purchase subsidy.

The incentives are only available to KiwiSaver members that meet certain eligibility criteria;

Basically the incentives and subsidy are aimed at assisting members to purchase their first home, however previous home owners can be eligible for the KiwiSaver first home withdrawal and KiwiSaver deposit subsidy if for example their income, assets and liabilities represent a financial position that would be expected of a person that has never owned a home.

If after reading this article you decide to apply for the subsidy, I would encourage you to first visit the following website http://www.hnzc.co.nz/kiwisaver or to contact your KiwiSaver provider.

After three years of KiwiSaver membership members aged over 18 can withdraw all of their own contributions, employer contributions and investment returns, (but not the $1,000 kick-start or the matching government contribution of up to $1,042.86 per annum,) to purchase an owner occupied property.

The first home purchase subsidy of up to $5,000 is available to members who have contributed to a KiwiSaver scheme for three years or more, and meet the eligibility criteria.

They are entitled to a home ownership deposit subsidy of $1,000 per year of savings, up to a maximum of $5,000 per person.

Any purchase must be made as per current KiwiSaver regulations for example; the property must be intended to be the principle place for you, or you and your family. You cannot use the funds to purchase an investment property.

Purchaser or purchasers’ income must be within the income caps established for general eligibility for the deposit subsidy. The income caps are currently $100,000 before tax for one or two people, and $140,000 before tax for more than two people.

The purchaser(s) have realisable assets of no more than 20 percent of the relevant regional house price cap which are; $400,000 for Auckland City, North Shore City, Rodney District, Wellington City and Queenstown Lakes District and $300,000 for all other areas. Currently, Manukau City, Waitakere City, Franklin District and Papakura District are considered ‘other areas’.

The new Auckland boundaries and new Auckland Council does not take effect until 1 November 2010. HNZC has indicated that the house price caps will be reviewed then.

The asset test is to ensure that previous homeowners who have insufficient assets to obtain a mortgage without Government assistance will qualify for first home withdrawal. HNZC’s website provides a summary of what it regards as realisable assets for this purpose.

Although too late for some, at last we have a genuine first homebuyer subsidy on offer that should not be over looked by those eligible.

Please Note: I recommend KiwiSaver Members apply early in the purchase process to determine eligibility.

Brian Dalley is a former NZMBA Mortgage Broker, Property Investor, and Real Estate Agent with over 15 years experience in the industry.  You can read more of his and other professional’s views and opinions on his website www.propertyprofit.co.nz. 

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