Q: I have been in KiwiSaver from the day dot and have never owned a house. My partner and I want to buy a section then build a home but probably can’t afford to build in the first 12 months. We want to secure the land as sections are selling fast but I am extremely frustrated by the process. I do not qualify for any grants and just want to put my KiwiSaver towards the deposit. We have signed the sale and purchase agreement and have the money put aside to secure the section. Settlement is not until January, but no one will confirm approval until 10 days out. I worry they will tell me 10 days out from settlement I cannot use my KiwiSaver funds. Then my finance would fall through.

A: Having been in KiwiSaver since it started means you tick the box for a first-home withdrawal. Anyone who has been a member for three years can take out all except $1000 of their KiwiSaver funds to buy a first home.

Therese Singleton, general manager, investments and insurance at AMP, has advice on the withdrawal process.

You can apply to your KiwiSaver provider for a first-home withdrawal as soon as you have a sale and purchase agreement and an undertaking from your solicitor (conditional or unconditional, depending whether you are applying for deposit or final settlement).

“There is no need to wait for 10 days from settlement,” says Singleton.

“When you submit your application with all the necessary documentation your provider will process it and when it is approved will pay the funds into your solicitor’s trust account.

“Your solicitor will hold the funds on your behalf in an interest-bearing trust account until payment is required for the deposit or final settlement of the property.

“It is important to remember you can only use your KiwiSaver funds to put towards the purchase of the land and not towards the costs of building the house, as you would no longer meet the eligibility criteria of never having owned a property.” That final point is very important for people looking to buy a block of land and then build.

Some have got the funds together to buy the land without resorting to KiwiSaver, only to discover they are locked out from using their KiwiSaver funds to build the house.

The first-home withdrawal rules require you to be buying or, in your case, building a house to be your family home – not an investment property or holiday home.

You also can’t have owned “an estate in land” – so, any property – in the past.

Disclaimer: Information provided is stated accurately to the best of the respondent’s knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice specific to their situation before making an investment decision.