In New Zealand, different home loan options are available with both pros and cons. Some of them are Table Loans, Offset Loans, Reducing Balance Loans, and Revolving Credit Home Loans. But, there is one more home loan option in New Zealand that people aren’t much aware of. That not-so-known name is Welcome Home Loans.
The Welcome home loans are typically for people who don’t have enough money for a downpayment or don’t make enough but dream to own a house. This scheme or loan policy works or is managed by Housing New Zealand. There is no role of the Reserve Bank’s loan to value rules (LVR).
How do Welcome Home Loans work?
Though Welcome home loans are backed by Housing New Zealand Corporation, they are available via private lenders. These lenders are participants in the Corporation’s program. It means you need to look for a private lender for the loans and don’t have to connect with the Corporation directly. But, make sure the lender is the participant of the Corporation. You should check the details and verify the background of the lender before applying.
In Welcome Home Loans, only a 10% deposit is required. And if we talk about conventional home loan options, they require a deposit of 20%. Another benefit of the Welcome Home loan is it is easily accessible for people with minimal savings, meaning you don’t have to undergo lots of stages or fill many forms. The only disadvantage is the loan is a bit expensive because the borrowed amount is larger.
What’s the loan amount in the Welcome Home loans scheme?
The Housing New Zealand Corporation has set house price caps on the Welcome Home Loans. If you purchase a house whose selling price is above the set house price cap or a certain limit, you won’t be eligible. In other words, financing will be impossible.
To calculate the final amount that you can borrow under the Welcome home loans scheme, you should subtract the 10% deposit from the set house price cap.
What’s the set house price cap?
The set house price caps vary from one city to another. For example, the house price cap will be different for Auckland from Wellington and Queenstown or Christchurch and Selwyn. So, you should check the house cap size of your city before applying for the Welcome Home Loans.
Who is eligible for Welcome Home Loans?
People who fulfill the following eligibility criteria are eligible for Welcome Home Loans:
- The total household income should not exceed $85,000 (before tax) for sole borrowers.
- The combined household income should not exceed $130,000 (before tax) in case of more than one borrower.
- The sale price of the home shouldn’t exceed a certain price limit
- The buyer's intention should be to live in the purchased house.
- The buyer shouldn’t own any other property in New Zealand or any other country.
- The Welcome Home loans aren’t approved for buyers buying property as an investment or rental purpose.
- The buyer should be a permanent citizen of New Zealand or hold a Permanent Resident Visa.
Now you very well know about Welcome Home Loans. So, if you think your financial condition isn’t allowing you to buy your dream home, apply for Welcome Home Loans.