USING YOUR DAIRY INDUSTRY SUPERANNUATION SCHEME TO BUY YOUR FIRST HOME
Following recent changes to the way in which the dairy industry super scheme operates, it is possible for members to make a withdrawal from both their standard (unlocked) accounts and locked-in-accounts (where applicable) to use towards the purchase of a first home, and in limited circumstances a second or subsequent house.
These changes will see a large number of people (many of whom were not previously able to secure finance) take advantage and use their dairy super to become first home buyers. We have already received enquiries from eligible members and we expect those numbers to grow as more and more people become aware of these changes and the opportunities now available to them. To help those considering making a withdrawal or wanting some basic information about the process, we have put together a short article below as a starting point. Of course you are welcome to call our friendly team to discuss in more detail how the scheme will work for you, or any other questions that you might have.
Who can apply?
While the ability to access your super is primarily aimed at those buying their first home, there are limited circumstances where the withdrawal is available to second home buyers. Whether you qualify as a second home buyer is determined by the criteria set out by Housing New Zealand for subsequent withdrawals. We can help you work thought the criteria to quickly determine if you are eligible.
To qualify for a house withdrawal you only need to have contributed to your Super Scheme for at least three years before making application for a withdrawal.
How much can I withdraw?
If you have been a scheme member (that is a member of a dairy industry super scheme) for less than 5 years, you can only use an amount equal to your resignation payment of your Employer’s No.1 Account. $1,000 must be left in any Locked-In Accounts.
When will it be paid?
Prior to any payments being made, the necessary application forms and support documents need to be with your super provider at least 14 days prior to the settlement date of your house purchase (the day that you pay for and take over the property). Our advice to clients is that they obtain confirmation in writing of their eligibility before confirming the finance condition of any sale and purchase agreement. Depending on what type of application you make, payment may be made for part or all of the deposit, or if just for the settlement amount (that is the house purchase price) it will be paid to your lawyers account on or shortly after the purchase agreement becomes unconditional (that is all the conditions are satisfied).
Limits on the home purchase withdrawal
As you would expect the idea behind the new scheme is to assist people into getting into their first homes. Accordingly the withdrawal may only be used to help buy a house, apartment, section, but not an investment property.
What else am I entitled to?
In addition to any super scheme withdrawal, then depending on your circumstances you might also be entitled to the KiwiSaver HomeStart grant.
These additional grants are administered by Housing NZ and cover two scenarios:
1 The purchase of an existing home; and
2 Building or purchasing a new home or land to build a new house on.
Depending on which you are applying for, there are different levels of grants available.
The HomeStart Grant offers for those enrolled in KiwiSaver or qualifying dairy super fund a $1,000.00 contribution for every year you have been enrolled, up to a maximum of $5,000.00. To qualify for one of these grants you must have been contributing to your Super Scheme’s Locked-In Accounts, a KiwiSaver scheme, exempt employers’ scheme or complying superannuation fund for 3 years. If you are buying or building a new house, the HomeStart grant doubles! If you are buying with another person who is eligible, you can combine your subsidies. There are some limits around income and combined income. Again we can help you with that detail.
HOW TO APPLY
Once you have entered into an agreement to purchase a property, or if you want to get pre-approval, it’s as simple as completing a Home Purchase Withdrawal form which can be downloaded from www.dairysuper.superfacts.co.nz. We can also help you with pre-approval for your KiwiSaver, HomeStart Grant or both! If you need any guidance or assistance please feel free to give us a call 06 2784055 or 06 7654142, we have copies of the forms available at our office.
The above is simply a brief overview of the scheme and how it operates in practice and is intended for general guidance only. We encourage you to make your own enquiries so that you get the best possible answer depending on your own personal circumstances; and of course, we are here to help you through that process should you wish.