On the house

24 June 2019

 

Over flatting? As Sean and Jayme discovered, your KiwiSaver account could be the key to owning your first home.

It used to be the kiwi dream. Get a job, work hard and buy yourself a house on a quarter acre section. But over time, the quarter acre began to shrink and eventually, so did the dream as house prices seemed to climb by thousands every week.

Happily for first home buyers, stabilising prices and favourable interest rates suggest that the dream has begun to make a comeback. So when Sean Cunneen and Jayme McKenzie learned that they could withdraw some of their KiwiSaver savings as a deposit on their first house, it was a happy reset moment for them both.

‘We decided early on that we’d pool our KiwiSaver savings with our other savings.’ Sean says. But after seven years of living and working in Auckland, the couple felt that the city’s overheated house market was still too much of a stretch.

‘Auckland just seemed too expensive.’ Sean says. ‘We’d been looking at apartments but decided we’d rather put our money into a house. So we’d been planning to eventually head back and buy in Christchurch.’

Then came their next reset moment. ‘After a chat with the bank, we found that we were in a better position than we’d first thought.’ Sean says. ‘That’s when we got in touch with our lawyer to mobilise our KiwiSaver savings.’

"We found that we were in a better position than we'd first thought. That's when we got in touch with our lawyer to mobilise our KiwiSaver savings."

If you’ve been a KiwiSaver member for three or more years, the KiwiSaver scheme you belong to, including the AMP KiwiSaver Scheme, will allow you to withdraw some of your savings to put towards purchasing your first home. Even if you’ve owned a home before, you may still be eligible if you're in a similar financial position as a first home buyer.

‘Once we found the house and were approved it was an easy process.’ Sean says. ‘We saw the lawyer, filled out the papers and that was my part done. Jayme did the same and a few days later we had acknowledgement that the funds were being released. Then a few days later it arrived in the trust account.’

Coming from a banking background, Sean is used to evaluating financial proposals but he’s unreserved in his endorsement of KiwiSaver. ‘It’s kind of a no brainer really.’ he says. ‘With the extra contributions you get from your employer and government, it’s worth putting in as much as you can. We didn’t qualify for a HomeStart Grant, but if you meet the criteria, it can add a lot more to your savings.’

“With the extra contributions you get from your employer and government, it’s worth putting in as much as you can.”

The IRD’s Homestart Grants can add up to $10,000 to your deposit if you’re buying an existing property or up to $20,000 for the purchase of a new home. You may qualify if you’ve been in KiwiSaver for at least three years and your household income (before tax) is less than $85,000 per year (for one person), or less than $130,000 per year (for two or more people). You can find out more here.

So now that Sean and Jayme have settled into their new home, what advice do they have for first homebuyers?

‘Put as much into KiwiSaver as you can - it goes up faster than you’d think and don’t be put off by all the open homes you have to visit. We saw heaps but each is a step closer to finding the right one.’

To map out your first home journey with KiwiSaver, visit our online calculator.