What Are the Welcome Home Loans?

Most families in New Zealand can afford to purchase a home only with the use of a mortgage. There are different types of loans that you can select from. The Welcome home loans are an option for all prospect house buyers who do not have sufficient savings for making the standard deposit required by most lenders. Find out what they have to offer.

How They Work

The Welcome home loans are backed by the Housing New Zealand Corporation, but they are available via private lenders participating in the Corporation's programmer. The special thing about them is that they require a deposit of just 10% while their conventional counterparts typically require a deposit of 20%. Basically, they are more easily accessible for people with minimal savings. At the same time, since the borrowed amount is larger, you can expect the loan to be more expensive.

If you do not have sufficient savings even for a deposit of 10%, you can take advantage of the Kiwi Saver scheme which is designed to support first-time home buyers. Via the scheme, you can obtain a subsidy or a savings withdrawal, depending on the way in which you participate in it.

Loan Amounts

There are house price caps set on the Welcome home loans. Basically, you will not be able to finance the purchase of a house whose selling price is above a certain limit. In order to calculate how much you can borrow, you need to subtract the 10% deposit from the house price cap.

Currently, the house price cap for Auckland is $485,000. For Wellington and Queens town Lakes it is $425,000. For Christchurch and Elwyn, the cap is $400,000. For other large cities and widely populated areas like Hamilton City and Coromandel, the cap is $350,000. For the rest of the country, the cap is $300,000. For comparison, the current average home sales price in New Zealand is $477,460.

Eligibility

There are two main requirements which you have to meet in order to quality for such a mortgage loan. Firstly, you must be a New Zealand citizen or a permanent resident. Your annual income before tax must not exceed $80,000 if you make an application as a single borrower. If you apply jointly with another borrower or more borrowers, your total annual income before tax must be no greater than $120,000. Keep in mind that the individual criteria of lenders apply as well. Generally, you have to have sufficient income to repay the loan and good credit history as well.