There are some major frustrations and misunderstandings surrounding Kiwisaver and Homestart and this article will attempt to clarify some major points on both these initiatives.
The Kiwisaver Withdrawal relates to the funds that a client has contributing to their Kiwisaver provider. The client can withdraw all contributions with the exception of the $1,000 Government Kickstart. The individual needs to have contributed to the Kiwisaver scheme for at least 3 years before they are eligible to withdraw these funds.
Approval for Kiwisaver generally takes 10 – 15 working Days. Some Kiwisaver Providers allow you to apply for Pre-approval to withdraw these funds but not all. However all Kiwisaver providers can advise you how much you are able to withdraw.
Some Kiwisavers can make funds available to pay the deposit as stipulated on the sale & purchase agreement. Some will not.
A solicitor does not need to be involved in the Kiwisaver application until they have to send off confirmation that there is an unconditional contract. However many people bring along the kiwisaver forms for the solicitor to complete. The solicitor is then increasing the time spent on the transaction meaning that their costs will be higher. It is estimated that if you use a solicitor to fill in the Kiwisaver forms it will cost a further $250 plus for their services.
Homestart is a Housing NZ Initiative. You need to be contributing to your Kiwisaver for a period of at least 3 years to be eligible to withdraw the subsidy. You are able to access $1,000 for each year that you have been contributing up to a maximum of $5,000. This is per person so if you are a couple that would be a maximum of $10,000. Recent changes in Homestart mean that if you are purchasing a new house (ie under 12 months old) or a building a new home then you can double that subsidy.
You can apply for Pre-approval from Housing NZ for the Homestart Subsidy. You do not need a solicitor to put your application in but if you do ask the solicitor to fill out the forms it is estimated to be around another $250.
Approval for Homestart application is approximately 10 working days. However it will be another 20 working days at least before the funds can be advanced.
We suggest the following recommendations
1) Get preapproval from Housing NZ. When applying make sure you send up exactly what they have asked for. Often documentation has been lost so keep a copy for your records.
2) Ask your Kiwisaver if they can give pre-approval for the Kiwisaver withdrawal. If they can put in a pre-approval. If not just ask them for written confirmation on how much you could withdraw.
3) Ask your Kiwisaver if they are able to advance funds earlier to cover the deposit stipulated on the sale & purchase agreement.
4) Only use your solicitor for the areas that they must sign off which is on the Kiwisaver application form
5) If you do not have pre-approval from your Kiwisaver provider and/or Housing NZ then have a finance date of 15 working days and get on to applying to Kiwisaver and Housing NZ immediately ie as soon as the contract is signed.
6) Make sure that the deposit stipulated on the sale & purchase agreement is no more than what you can get access to on the date it has to be paid over.
7) Make sure that settlement date is at least 20 working days from the time you go unconditional to allow time for Kiwisaver and Housing NZ funds come through.
8) Christmas is coming up so be aware that these longer time frames may mean that Settlement before Christmas is not possible. If that is a deal breaker then get on to this earlier rather than later.
