Many New Zealanders assume that once you have owned property, you can never access KiwiSaver for a home again. This is not always true. The second chance withdrawal allows some previous owners to use their KiwiSaver as if they were first home buyers.
The rules are specific and require meeting particular criteria, but for those who qualify, it opens up an important pathway back to home ownership.
Who Qualifies For Second Chance
You may qualify for a second chance withdrawal if you previously owned property but are now in a similar financial position to a first home buyer. Kāinga Ora assesses applications based on your current circumstances rather than your past ownership.
The key factors include your current assets, income, and whether you could reasonably afford to buy without KiwiSaver assistance. Having sold a previous property does not automatically disqualify you.
Previous owners who lost their home through relationship breakdown, financial hardship, or other circumstances beyond their control often qualify. The assessment considers why you no longer own and your path back to ownership.
The Application Process
Second chance applications go through Kāinga Ora. You cannot simply request the withdrawal directly from your KiwiSaver provider.
You will need to provide documentation explaining your circumstances. This includes details about your previous property ownership, how it ended, and your current financial position.
The process takes longer than standard first home withdrawals because each application is individually assessed. Allow several weeks for the review and approval process.
Financial Position Assessment
Kāinga Ora considers whether you could purchase a modest home in your area without the KiwiSaver withdrawal. If your savings and borrowing capacity would allow this, you may not qualify.
They assess your "realisable assets"—cash, savings, investments, boats, caravans, and other property interests. To qualify for second chance eligibility, your total realisable assets must be below $650,000. This threshold ensures the withdrawal goes to those genuinely in a first home buyer financial position.
Income assessment considers your ability to service a mortgage and save for a deposit. The assessment aims to determine if you are genuinely in a first home buyer position despite having previously owned. Being asset-rich from a previous property sale would typically disqualify you.
Common Qualifying Scenarios
Relationship separation is a frequent reason for second chance applications. If you left the family home and your former partner retained it, you may qualify if you received limited settlement proceeds.
Forced sales due to financial hardship, illness, or job loss often qualify if you used sale proceeds to pay debts and are now rebuilding. The key is demonstrating genuine financial difficulty rather than choice.
Selling to move regions for work and being unable to afford re-entry to the property market can also qualify. Each situation is assessed on its merits.
What You Can Access
Successful second chance applicants can withdraw their full KiwiSaver balance minus the $1,000 that must remain. This follows the same rules as standard first home withdrawals.
Combined with any savings you have rebuilt, these funds can form a meaningful deposit contribution for your next home purchase.
Preparing Your Application
Gather documentation about your previous ownership including settlement statements, sale contracts, and evidence of where proceeds went. Clear records strengthen your application.
Write a letter explaining your circumstances honestly and completely. Include the chain of events from previous ownership to your current position and your plans for home ownership.
Having a conditional approval from a lender helps demonstrate you are ready to purchase and just need the KiwiSaver withdrawal to complete your deposit.
Working With Mortgage Advisers
A mortgage adviser experienced with second chance applications can help structure your case effectively. They understand what Kāinga Ora looks for and can advise on documentation.
They can also coordinate timing so your lending approval remains valid while the second chance application is processed. The extended timeframe requires careful planning.
If your application is declined, an adviser can help identify what changed circumstances might enable a future application or alternative pathways to home ownership.
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