What Is The 3-Year Rule For KiwiSaver?
The “3-year rule” in KiwiSaver refers to a specific condition that allows you to access your KiwiSaver savings to purchase your first home. To be eligible for this withdrawal, you must meet the following criteria:
1. You have been a KiwiSaver member for at least three years
If you want to use your KiwiSaver savings to buy your first home, you need to have been a KiwiSaver member for a minimum of three years or more. This means you have been regularly putting money into your KiwiSaver account or, in some cases, have not been able to contribute because of financial difficulties or other specific reasons. The three-year rule is there to make sure that you have been saving for a reasonable amount of time before using your KiwiSaver savings to buy a house.
2. The home you’re purchasing is your first home
If you are a first-time homebuyer in New Zealand, the KiwiSaver scheme gives you the option to withdraw money from your savings to purchase your first home. To qualify for this program, you must not have owned a property in New Zealand or any other country before, and the property you intend to purchase must be located within New Zealand.
3. You intend to live in the home as your primary place of residence
If you’re planning to buy your first home and have a KiwiSaver account, you can withdraw some of your funds to help with the purchase. However, it’s important to note that this option is only available if you’re buying a home to live in yourself, not as an investment or rental property. You need to genuinely intend to live in the property as your primary residence. This rule is in place to make sure that KiwiSaver money is used to help people like you buy a home to live in and not for investing purposes.
If you meet these three requirements, you can apply for a first-home withdrawal from your KiwiSaver account to assist with the purchase of your first home. This withdrawal can include:
- All of your contributions
- All of your employer’s contributions
- Any interest that you’ve earned
- Any member tax credits
Read More: How KiwiSaver Can Help You Buy Your First Home
However, there is a requirement to keep a minimum balance of $1,000 in your KiwiSaver account after the withdrawal. This means that the total amount you can withdraw will be your contributions, your employer’s contributions, any interest earned, and any member tax credits minus $1,000, which must remain in your KiwiSaver account after the withdrawal to keep your account active. It’s a way to ensure that you continue your participation in KiwiSaver and maintain an active savings presence even after accessing your funds for your first home purchase.
It’s important to note that the 3-year rule for KiwiSaver applies to the duration of your membership, not the frequency of your contributions. This means that if you’ve been a member for three years and meet other requirements, you may be able to withdraw your funds, even if you haven’t contributed regularly. However, the rules and criteria for KiwiSaver can change, so it’s best to check with your provider or financial advisor to get the most up-to-date information.