Second Chance Home Buyers: Can You Use KiwiSaver If You’ve Owned Property Before?
Disclaimer: The below guide is general in nature and do seek individual financial advice to see how this applies to your situation. Our experienced advisers are on hand to help at no cost to you (T’s and C’s apply)
Life doesn’t always go in a straight line. Whether it is due to a relationship separation, a business venture, or moving overseas, many Kiwis find themselves selling their property and eventually starting over.
If you are trying to get back on the property ladder, you might feel locked out of the government support designed for first-home buyers. However, Kāinga Ora has a specific pathway for exactly this situation: the Second Chance Buyer exemption.
If you meet the criteria, you may still be able to withdraw your KiwiSaver or access a 5% deposit First Home Loan, even if you have owned a house in the past. Here is a plain-English guide to how the Second Chance pathway works.
The Golden Rule: Have You Used It Before?
Before we look at the financial criteria, there is one non-negotiable rule: You can only use these schemes once.
If you previously withdrew your KiwiSaver to buy your first home, or you previously used the First Home Loan scheme, you cannot use them again. The Second Chance exemption is strictly for previous property owners who did not use these specific first-home buyer tools the first time around.
The Second Chance Eligibility Criteria
To be classified as a "Previous Home Owner" (Second Chance Buyer) by Kāinga Ora, you must meet the following baseline requirements:
No Current Ownership: You cannot currently have your name on the title of any property in New Zealand or overseas (excluding Māori land).
The Inheritance Rule: If you have inherited a home or a piece of land and your name is currently on the title, you are considered a homeowner and are not eligible. You would only become potentially eligible after that property is sold.
The Asset Limit: Your total "realisable assets" must be worth no more than 20% of the house price cap for an existing property in your specific region. (note: follow the link, expand the ‘Find out more about being a qualifying previous home owner’ and note the regional house price caps for your region)
Note: The First Home Loan and KiwiSaver withdrawal also have their own standard income caps and contribution rules. You must meet those as well; these are simply the extra hurdles to prove you need a "second chance."
How the 20% Asset Limit Works
This is where the math gets a little complex, so it is always worth talking to your adviser to ensure you are calculating this correctly.
Even though the government discontinued the First Home Grant, Kāinga Ora still uses regional "House Price Caps" specifically to calculate how much wealth a Second Chance buyer is allowed to hold.
Step 1: Find your regional cap. Find the Kāinga Ora house price cap for an existing home in the region you want to buy in. For this example, let’s say the Wellington region cap is $750,000.
Step 2: Calculate 20%. Take 20% of that regional cap. $750,000 x 20% = $150,000. This means to qualify in Wellington, you must have no more than $150,000 in total realisable assets.
What Counts as a "Realisable Asset"?
Kāinga Ora wants to see that you genuinely need financial help to buy a home, which means you cannot be sitting on a mountain of easily accessible cash or luxury goods. You must add up the value of:
Cash and savings: Including any money tied up in term deposits.
Investments: Shares, stocks, or bonds.
Luxury items: Boats or caravans valued over $5,000.
Excess vehicles: Kāinga Ora expects an individual to own one car (or a couple to own two cars). Any vehicles you own beyond this basic need will be counted as an asset.
Paid deposits: Any deposit for a house you have already paid to a vendor.
What is NOT counted? Your KiwiSaver balance! Because the goal is to use your KiwiSaver to buy the house, the money currently sitting in that account does not count toward your asset limit.
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How It Works in the Real World: Jim’s Story
Let’s use "Jim" as an example. Jim lives in Wellington and wants to buy a house.
Jim owned a property with his former partner. Due to a separation, they sold the house. After paying off the mortgage and finalizing the legal costs, Jim walked away with $100,000 in cash. He has never withdrawn his KiwiSaver for a house before.
Here is Jim’s current financial snapshot:
Cash from house sale: $100,000
KiwiSaver balance: $50,000 (Exempt)
Everyday vehicle: $10,000 (Exempt)
Second/Excess car: $10,000
Savings in a Term Deposit: $12,000
To find his realisable assets, we only add up the cash, the excess car, and the term deposit.
$100,000 + $10,000 + $12,000 = $122,000 Total Realisable Assets.
Because the Wellington limit for realisable assets is $150,000, Jim is well under the threshold! He would likely be approved as a Second Chance buyer, allowing him to tap into that $50,000 KiwiSaver balance to help buy his new home.
How to Apply
If you are starting over and think you might qualify as a Second Chance buyer, getting your ducks in a row early is crucial. The application process requires providing evidence of your assets to Kāinga Ora before you can formally apply for your mortgage or KiwiSaver withdrawal.
If you have any doubts about whether you qualify, or how your specific assets will be calculated, get in touch with our team today and we can guide you through the exact steps.
