How KiwiSaver can support your first home purchase

However, KiwiSaver still has many features that can help you achieve your dream of owning a home.

First home withdrawal

One of the key advantages of KiwiSaver is that it can be used towards your first home deposit. If you’ve been contributing to your KiwiSaver for at least three years, you can withdraw most of your savings to help fund your first home purchase. You’ll need to leave $1,000 in your account, but the rest, including your contributions, your employer’s contributions, and government contributions, can be used towards your deposit, providing a considerable boost.

Growing a deposit

KiwiSaver funds grow over time through investments made by your fund manager. This means your savings not only earn returns but also benefit from the power of compounding returns, where returns generate additional returns. By the time you’re ready to buy a home, the money you contribute today could significantly increase in value.

To enhance your deposit savings, consider increasing your contribution rate. Employees can choose to contribute 3%, 4%, 6%, 8%, or 10% of their gross salary. Even a slight increase in contributions can make a substantial difference over time. Because these contributions are deducted before you see your pay, it’s an effective way to stay committed to your savings plan. 

Selecting the right fund

KiwiSaver providers offer various fund options, ranging from conservative to aggressive. The right choice depends on your time frame and risk tolerance. If you have a longer period before purchasing a home, a growth fund may provide higher returns, though it comes with more risk. Conversely, if you’re planning to buy soon, a conservative or defensive fund may be more appropriate to avoid significant dips in your savings.

Maximising government contributions

Remember that for every dollar you contribute to KiwiSaver, the government adds 50 cents, up to a maximum of $521.43 per year. To receive the full government contribution, ensure you contribute at least $1,042.86 between 1 July and 30 June each year. This is essentially free money that can further accelerate your savings growth.

While the discontinuation of the HomeStart Grant is a setback, KiwiSaver remains a powerful tool on your journey to homeownership. By understanding the growth potential of your KiwiSaver account, choosing the right fund, and fully utilising the government contributions, you can still build a substantial deposit for your first home. If you need assistance ensuring your KiwiSaver is optimised for buying your first home, contact us here!