These deposits can be two very different things!
We often see this causing confusion for our first home buyers and explain below:
Deposit for the real estate agent
In most circumstances, an agreement for sale and purchase will require that a purchaser pay 10% of the agreed purchase price once all conditions have been satisfied.
The deposit paid to the real estate agent can be comprised of savings, Kiwisaver withdrawal and monetary gifts from parents or family. Purchasers cannot include Kainga Ora First Home Grants for the deposit to be paid to the real estate agent (but may need to provide evidence of this for the bank’s purpose of a deposit explained below).
If you are requiring Kiwisaver withdrawal for your deposit or for part payment of the purchase price on settlement, it is important you get in touch with us as soon as possible. The formal withdrawal process requires completion of an application form, statutory declaration and certified documents being sent to your Kiwisaver provider and can take up to 15 working days for funds to be made available, especially if you have lived outside of New Zealand while contributing to Kiwisaver.
You need to have a signed agreement for sale and purchase to start your formal Kiwisaver application for withdrawal.
Any deposit a purchaser has made to the real estate agent will be shown as a credit towards the purchase price at the time of settlement.
We do not recommend having any more than 10% of the purchase price recorded on the agreement for sale and purchase as your deposit to be paid to the real estate agent on satisfaction of your conditions.
Deposit for the bank
Your bank manager or mortgage broker will require evidence from you that you have a deposit available to apply towards a purchase of a property.
This can be comprised of savings, Kiwisaver withdrawal, gifts of funds from parents or family and Kainga Ora First Home Grants.
To show your bank manager or mortgage broker you have funds available to withdraw from Kiwisaver, we recommend you contact your Kiwisaver provider to ask for a pre-approval letter to be given to you. This should be sufficient evidence to show your bank you can withdraw your Kiwisaver funds once you have made formal application for withdrawal.
You can also get Kainga Ora pre-approval that you fit the eligibility criteria to obtain a First Home Grant prior to entering into an agreement for sale and purchase. This is completed on-line:
As with your Kiwisaver withdrawal, Kainga Ora final approvals require a signed and dated agreement for sale and purchase before withdrawal / payment of the First Home Grant can be made.
We have detailed Information Sheets to assist with applications for formal Kiwisaver withdrawal and Kainga Ora First Home Grants – please get in touch if you would like us to email you these.