We recommend that you ask your own Kiwisaver provider for a pre-approval so that you know that you are eligible to withdraw your own Kiwisaver funds. The Withdrawal of Kiwisaver funds is then applied for when you have signed the Agreement for Sale and Purchase (most providers will allow you to apply prior to the agreement becoming unconditional) and it can take up to 10 working days to process (depending on the provider). Most providers have the application form online. Your lawyer will have to sign a Lawyer’s undertaking letter and send this to your provider as well. Your Kiwisaver funds get deposited directly into your Lawyer’s trust account to use for the settlement (or as the deposit, if applicable).
Some purchasers are also eligible for a HomeStart Grant through Housing NZ. You can apply for a Pre-Approval as soon as you are looking for a house as Housing NZ requires 4 weeks notice http://www.hnzc.co.nz/buying-a-house or if you have found a property then apply as soon as possible. Once Housing NZ has approved the subsidy they send your Lawyer documents for you to sign. Your Lawyer then has to send the signed documents back to Housing New Zealand at least 5 business days before settlement. The subsidy funds get deposited directly into your Lawyer’s trust account to use for the settlement.
Once you have an Agreement to purchase a property and Housing NZ has approved the Grant they send your Lawyer documents for you to sign. Your Lawyer then has to send the signed documents back to Housing NZ at least 5 business days before settlement. The funds get deposited directly into your Lawyer’s trust account to use for the settlement.
Make sure that the Settlement Date in the Agreement gives you enough time to sort out your Kiwisaver requirements. This will depend on what you qualify for and whether you have obtained Pre-Approval or not. Check carefully! If in doubt gives yourself more time rather than less
You cannot use any funds for the deposit on a property (unless your application specifically request this and your Lawyer checks that the payment is adequately protected in case the purchase does not proceed). You cannot use any funds received after settlement date. Check that your bank will accept your Kiwisaver funds as counting towards your contribution to the purchase. Let your Lawyer know as soon as possible that you are withdrawing your Kiwisaver funds and/or applying for the HomeStart Grant so they can watch the timeframes aswell.
Contact Taryn or Chantel at The Law Company for more information.
Disclaimer – this article is necessarily brief and general in nature. You should seek professional legal advice for your particular circumstances.