Second Chance Home Buyers: Can You Use KiwiSaver If You’ve Owned Property Before?

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Life does not 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.

Here is how the rules work, how to calculate your asset limits, and how to find out if you qualify to use your KiwiSaver or the 5% deposit First Home Loan as a previous homeowner.

Have you used these schemes before?

KiwiSaver vs. Second Chance: Understanding the difference

It is incredibly common for these two concepts to get tangled up. Second Chance (formally known as the Previous Home Owner exemption) is simply a status granted by Kāinga Ora. It essentially means: Even though you have owned property in the past, your current assets are so low that we are going to treat you like a first-home buyer.

Here is how the once-in-a-lifetime KiwiSaver rule and the Second Chance status interact:

• Scenario A (You can use your KiwiSaver): You bought a house 10 years ago, but you did not use your KiwiSaver to do it. You have since sold the house and currently have very few assets. You apply for Second Chance status. Because you have Second Chance status and you have never used your KiwiSaver first-home withdrawal before, you are allowed to withdraw your KiwiSaver now.
• Scenario B (You cannot use your KiwiSaver): You bought a house five years ago and you did withdraw your KiwiSaver to help buy it. You have since sold the house. Even if Kāinga Ora grants you Second Chance status today, you still cannot withdraw your KiwiSaver again.

How the 20% Asset Limit Works

This is where the maths 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.
• 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.

Please check the official Kāinga Ora Website.

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 finalising 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
• Excess second car: $10,000
• Savings in a Term Deposit: $12,000
• KiwiSaver balance: $50,000 (Exempt)
• Everyday vehicle: $10,000 (Exempt)

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.

Wondering where you stand? Test your eligibility below.

Navigating regional price caps, vehicle exemptions, and realisable asset limits can get confusing quickly. We’ve built the interactive Second Chance Eligibility Checker below to do the heavy lifting for you.

Simply select the region you are hoping to buy in, answer a few quick questions about your property history, and tally up your current assets. The calculator will automatically pull the relevant Kāinga Ora price caps, apply the 20% asset rule, and give you a clear indication of whether you are likely to qualify for a second chance at government assistance.

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.

Apply with Kainga Ora as a Second Chance Buyer

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.