Second 'first home' tricky after divorce

When my husband and I divorced five years ago, we sold our property and began shared custody of our three sons. Since then I have been renting.

Q: When my husband and I divorced five years ago, we sold our property and began shared custody of our three sons. Since then I have been renting. I have never looked for a handout and recently went to the bank to see if I could use roughly $37,000 from my KiwiSaver as a deposit on a home. I own no other property and thought owning my own home would be better than paying rent of $570 a week. I was turned down, as my salary was above $80,000. I have a good job in IT but clearly will never manage to pay rent, raise three children and still afford to buy a house. Is there any hope for me?

A: The short answer is no.

Previous homeowners, like yourself, are able to get back into the housing market using KiwiSaver if they're in the same financial position as a first-home buyer.

Unlike regular first-home buyer withdrawals where your KiwiSaver provider makes a call on whether you can dip into your funds, anyone who owned a house in the past has to get their application approved by Housing New Zealand.

A key criteria is your current income.

For a single person like yourself that is a maximum of $80,000 earned in the previous 12 months. Couples or people clubbing together to buy a house can earn a combined $120,000 in the past year.

Housing New Zealand will also check what it describes as "realisable assets".

These are investments like term deposits or money in bank accounts, shares, classic motorbikes or cars and expensive boats or caravans " basically things of value that can be cashed up.

Realisable assets need to be under 20 per cent of the regional house-price cap for the area you're planning to buy.

In Auckland that would mean not having more than $110,000 in realisable assets, dropping to either $70,000 or $90,000 elsewhere, depending on where you live.

Iain Duncan of Housing NZ points out those meeting the criteria for a first-home withdrawal as previous homeowners can often be eligible for the HomeStart grant that it also administers.

This can be an extra $3000-$20,000, depending on your circumstances, on top of any funds you can withdraw from your KiwiSaver account.

Many of the same rules apply to the HomeStart grant as for previous homeowners who want to re-enter the housing market. The one major difference is you need to be buying or building a relatively modest home to get the HomeStart grant.

House-price caps, which vary from region to region, dictate how much you can spend.

Unlike the salary caps, these have been adjusted since KiwiSaver was introduced to reflect booming house prices in some parts of the country.