KiwiSaver Withdrawal – I have owned a house before, am I eligible? What do I need to look out for?

Tim and Doreen finally found a house they liked within their price range so they put an offer on it that was accepted!

They had their finance confirmed subject to Tim’s KiwiSaver Withdrawal.  They checked the Housing New Zealand website, and thought Tim was eligible for a “Second Chance” KiwiSaver Homeowner Withdrawal.

However upon applying to Housing New Zealand Tim he found he was not eligible because their joint incomes in the last twelve months were more than $100,000, even though their current incomes were less than $100,000.

This meant that they were unable to obtain finance and unable to complete their purchase.  To be eligible for the “Second Chance” Withdrawal through your provider you need to answer YES to ALL the following points:

• I have not received a first home KiwiSaver withdrawal before, and I have been contributing to KiwiSaver for at least three years.
• I have previously owned a home, but at the time of my application NO LONGER have an interest in a property.
• I/We have a combined gross (before tax) annual income earned in the last 12 months of $100,000 or less (for one or two buyers), or $140,000 (for three or more buyers).
• My realisable assets are less than 20 percent of the house price cap for the area I am buying in.  For example, the current house price cap in Wellington City (within the Wellington City Council boundaries) is $400,000, so your realisable assets must be under $80,000.00.  If you are buying in certain other areas the house price cap is only $300,000 and therefore your assets would need to be under $60,000.

If you answered “Yes” to all the above points there are two steps in applying for your withdrawal:

1. Apply to the “Minister of Housing” via Housing New Zealand for confirmation that you are eligible under this scheme.  
2. You can apply for this approval (called a Letter of Determination) at any time, even before you find a property you want to buy.  We strongly recommend you apply for this Determination as soon as possible as it takes up to four weeks to obtain.  Waiting for this approval/letter is the most common reason why KiwiSaver Second Chance Withdrawals get delayed.
3. Once you have received your Letter of Determination from Housing New Zealand you are then in a position to contact your KiwiSaver provider and apply for a Withdrawal.

*Please note income thresholds and house cap prices are current as at the date of this article however are due to change on 1 October 2013