KIWI SAVE R GU I D E | BO O STE R
PART THREE: Strategies for First Home Buyers
Your Guide to KiwiSaver
KiwiSaver is a great way to help you save for your first home. Here’s a guide to help you reach your goal. WHY BUY A FIRST HOME USING KIWISAVER?
WHAT’S THE FIRST STEP?
Because it’s a smart idea. When it first started, KiwiSaver was primarily intended as a superannuation scheme for retirement, but the government also realised how important owning your own home is to retirees.
How much do houses sell for where you’re looking? What help can you get to get a deposit, from friends and family, or the government? What’s your timeframe?
The KiwiSaver First Home Withdrawal means that after you’ve been a member for three years, you can withdraw your money for a first home deposit, as long as you leave no less than NZ$1000 in the account.
“In our experience, a lot of people underestimate the amount of time they need to get enough money to buy a house,” says David Copson, Booster’s Head of Growth.
KiwiSaver has been the single biggest change in the past century helping Kiwis buy their own homes. Here’s why:
“We have a process that we take first home buyers through, to work out their goals and timeframes.”
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It makes saving automatic. You’re putting aside a percentage of your pay without having to think about it.
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Your employer puts in money, too, currently 3 per cent of your pay.
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The government pitches in as well, giving you $521.42 a year. Just put in at least $1042.86 between 1 July to 30 June each year to get this ‘government contribution’.
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And there are other cool things you can get to help you buy a house, like the First Home Grant and the Kainga Ora First Home Partnership Scheme. Read on for more on those.
Do your research.
If you joined when the scheme started in 2007 and claimed the full government contribution for 14 years, you’d be
$7,300 RICHER by now (plus returns).
WHO CAN WITHDRAW FOR A FIRST HOME? When you’re buying your first home you may be able to make a one-off withdrawal of most of your KiwiSaver savings – as long as you’ve been a KiwiSaver member for at least three years. You may even qualify if you have owned property previously, but you’re in a situation similar to a first home buyer, say after a divorce. WI NTE R 2 0 2 2 | I N F O R M E D I NVESTO R 7 4
He says one of the most important first steps is to make sure you’re realistic about when you’re going to buy your first home and how much you expect to spend. “Are you currently using KiwiSaver, how much are you saving, and do you have any other funds? Where is that going to get you in two years? And where do you want to buy that first house?” Calculators like those on KiwiSaver provider websites and at www.Sorted.org.nz will tell you roughly how much money you’ll have in one year, two years or up to 20 years. Just put in: •
Your date of birth.
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Your annual pay.
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Your contribution rate.
Copson says there’s a free calculator on the Booster website, www.booster.co.nz, that lets you dial up your contributions from 3 per cent to 10 per cent, to see how much faster you could reach your goal. Do your numbers first. He says sometimes it’s a wakeup call for buyers to discover they’ll have to push out their timeframe a year or more if they want to buy in the city.
