A first-time buyer with four years in KiwiSaver wants to use a withdrawal to buy a flat that she will rent to tenants while she keeps living with her parents. Can she use a first-home withdrawal?
Correct Answer
A) No; she must intend to live in the property, not use it as an investment.
Kāinga Ora states that a member making a first-home withdrawal must intend to live in the property and cannot use it to buy an investment property. A flat bought only to rent out does not qualify, whatever the length of membership.
Why This Is the Correct Answer
The withdrawal is for a home the member will live in, and an investment purchase is excluded.
Why the Other Options Are Wrong
Option B: Yes; any first property qualifies once she has been a member for three years.
Membership length is not enough; she must intend to live in the property.
Option C: Yes, provided she leaves at least $1,000 in her KiwiSaver account.
Leaving $1,000 is a requirement, but it does not cure buying a property she will not live in.
Option D: Yes, but only if the flat is bought with a Kāinga Ora First Home Loan.
Using a First Home Loan does not change the rule that the withdrawal is for a home the member will live in.
Background Knowledge for Finance
Source: https://kaingaora.govt.nz/en_NZ/home-ownership/kiwisaver-first-home-withdrawal/
Exam Tip for Finance
First-home withdrawal = owner-occupied home only.
Common Mistakes to Avoid on Finance Questions
- •Thinking the three-year membership rule is the only test.
More Finance Questions
What is the current standard LVR (Loan-to-Value Ratio) restriction for owner-occupier residential property purchases in New Zealand?
What is a key advantage of a revolving credit mortgage facility?
When assessing a mortgage application, which factor is typically given the highest priority by New Zealand lenders?
James has been contributing to KiwiSaver for 4 years and wants to withdraw funds for his first home. His KiwiSaver balance is $45,000, but $15,000 consists of government contributions and employer matching. What is the maximum he can withdraw for his house deposit?
What is the main advantage of a table mortgage compared to an interest-only mortgage?
- → What is the maximum amount a first home buyer can withdraw from their KiwiSaver account for a house deposit?
- → What does LVR stand for in New Zealand mortgage lending?
- → What is the key difference between a table mortgage and an interest-only mortgage in terms of monthly payments?
- → A bank checks how much of a borrower's gross income would go on debt repayments. The borrower earns $80,000 a year, already pays $800 a month on other debts, and the new mortgage would cost $2,200 a month. What share of gross income would the repayments take?
- → Sarah earns $80,000 annually and wants to borrow $400,000. What is her debt-to-income ratio?
- → A property is valued at $600,000 and the buyer has a $100,000 deposit. What LVR would this loan represent?
- → Which of the following is NOT typically considered by banks when assessing lending criteria?
- → How long must a KiwiSaver member have been contributing before they can withdraw funds for their first home?
- → Which type of mortgage allows borrowers to make additional payments that can be re-borrowed later?
- → A couple with a combined income of $120,000 wants to buy their first home for $650,000. They have a 15% deposit. What is their LVR?
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