BEWARE and BE PREPARED!
There are some excellent benefits available through KiwiSaver to first home buyers (click here for a refresher on what those are)
However, there are some specific fish hooks that you need to be aware of when applying for the KiwiSaver Home Start Grants...
Minimum contributions to your KiwiSaver account for minimum period of 3 years.
This is usually something that is taken for granted as the deductions are taken directly out of our salaries/wages right?
Mostly yes, however, if you have had a period of time where you were not earning wages, possibly for parental leave, or because you were working on a contract (therefore responsible for your own PAYE and KiwiSaver) before starting on wages, or were out of the country working overseas etc, then these periods of time can potentially trip you up when it comes to a successful application for the Home Start facilities and Welcome Home Loans.
Unless you have contributed the exact minimum for each and every year of your KiwiSaver term, then your application for Welcome Home loan and Home Start grants can be declined, and therefore you have potentially lost between $6,000 and $20,000 worth of freebies per couple.
This could be the difference between being able to afford the home that you want or not!
My advice would be to check in with IRD around about the beginning of June each year (the KiwiSaver year runs from 1 July to 30 June), to see if you’ve contributed the minimum of 3% of your income.
If you haven’t, then you can find out what your shortfall is, and top the account up before the end of the month. It’s easy to do, just make a bill payment to your KiwiSaver Provider.
Welcome Home Loan applications will be declined if you have vehicles whose combined total is worth more than $10,000! Vehicles include boats and caravans. The thought process here is that a First Home Buyer should be putting as much of their resources into a deposit as possible.
Bank account conduct, loan repayment history is EVERYTHING to these guys.
They will ask for 6 months’ worth of up to date bank statements for all of your bank accounts, as well as 6 months worth of statements for any personal loans / finance arrangements you’ve had over the last 6 months. If you had fully repaid a loan within the last 6 months, they will then ask for 6 months worth of statements for that loan, prior to it being repaid.
This can be a paperwork frustration, however, do you want the grant or not?!
They are looking for missed payments, accounts overdrawn without an arranged overdraft limit, dishonoured items, and honoured items. Yes, this even can mean not having enough in the account to cover bank fees! This is regardless if you have sufficient funds in a different account that you could transfer. Their opinion is that YOU are responsible for keeping an eye on your own finances, not the bank.
They may be lenient on maybe one excess, however anything more than that then your application is likely to be declined.
So my simple advice is to be extra vigilant on your account conduct, be aware of direct debits and make sure there is enough in the accounts to take care of these especially for the 6 months leading up to when you intend to apply for the Welcome Home Loan and Home Start Grants.