Should you take all of your KiwiSaver out to buy your first home?

We get asked this often, when clients have more deposit than is required and wonder if they should leave some of the money in the KiwiSaver to keep the balance higher.

Generally I suggest people take the lot out. Firstly, the fact that you can have a smaller mortgage and secondly your overall wealth does not change, the money is just in the house equity rather than in KiwiSaver balance.

You have only one chance to decide, because once you own a house you cannot change your mind and get the rest of the money, so below here are some pros and cons to help you decide.


  1. You will have a smaller mortgage – by taking more money out, you will be able to have a smaller loan, which will reduce the payments. This will let you either pay a bit more to pay it off faster, or have a bit more money for your budget.
  2. You can have a bit more cash – if you take more KiwiSaver out, you may be able to hold back some of the cash savings you would have otherwise have to put into the loan. this will let you have a bit more cash for renovations, or a buffer fund for any future emergencies.
  3. You may be able to stretch to a bigger house - If you need to get a more expensive house than expected, using more of your KiwiSaver means you can still keep a decent deposit (which can help with lower rates).
  4. Your wealth does not change - Having $10 000 in KiwiSaver or have a $10 000 lower mortgage does not change your total wealth. Its just in a different place.


  1. Your KiwiSaver has to rebuild – your KiwiSaver will be down to $1000 max, which means it will take a while to rebuild and having a low balance can suck a bit. The closer you are to retirement, the less this will grow.
  2. You may be selling during a market low – when you take money out of your KiwiSaver, they sell the units to get your cash. If the unit price has dropped you will get less money, and the KiwiSaver cannot grow back the loss. If you don’t take as much out, you still have those units.
  3. You will have to focus on the mortgage – Kiwis don’t like to have a mortgage so will (eventually) focus more to paying it off faster. Keeping more money in KiwiSaver means that you have a bigger mortgage so have to pay it back. But conversely Kiwis don’t (currently) have the same reaction to building the KiwiSaver.

So what do you think? Let us know your thoughts and if you have any questions on KiwiSaver or any financial other area.

Alan Borthwick