Helen Twose: Welcome Home eases buyers' path

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Photo / Janna Dixon
Photo / Janna Dixon

How do you qualify for a Welcome Home Loan? How are they different to a normal mortgage? Is it only first-home buyers who can get them?

The Welcome Home Loan administered by Housing New Zealand helps people with modest incomes get a home loan with a small deposit.

Housing New Zealand is not the lender but underwrites the loans, which are provided by participating lenders such as selected banks and credit unions.

It differs from most loans offered by banks as it requires a minimum deposit of only 10 per cent of your chosen home's purchase price compared with most lenders which will require a 20 per cent deposit from today.

The Welcome Home Loan is designed for first-home buyers who can afford to make regular repayments on a home loan, but might have trouble saving for a 20 per cent deposit.

Your 10 per cent deposit can comprise:

* Your KiwiSaver deposit subsidy.

* Your KiwiSaver savings withdrawal.

* A gift from a relative, as verified by a gifting certificate.

* Money already paid to a real estate agent.

* Your bank savings.

If you are the sole borrower you must have a total household income for the past 12 months of $80,000 or less (before tax).

If you are teaming up with one or more borrowers to buy a house then you can have a combined household income of up to $120,000 (before tax).

The maximum amount you can borrow with a Welcome Home Loan depends on the house price cap for the region you are buying in.

The maximum loan for that region is the house price cap less your 10 per cent deposit.

The new house price caps from today are:

Auckland - $485,000.

Wellington City and Queenstown Lakes - $425,000.

Christchurch City and Selwyn District - $400,000.

Thames/Coromandel, Hamilton City, Western Bay of Plenty, Tauranga City, Kapiti Coast, Porirua City, Hutt City, Upper Hutt, Tasman/Nelson and Waimakariri - $350,000.

Rest of New Zealand - $300,000.

You must plan to live in the home you are buying, cannot own any other property and need to be a New Zealand citizen or permanent New Zealand resident (holding a Permanent Resident Visa).

A Welcome Home Loan cannot be used to buy an investment or rental property.

Each participating Welcome Home Loan lender also has its own credit criteria you will need to meet.

If you previously owned property but no longer do so, you can still be eligible.

You will need to be in the same financial position as a first-time home buyer in terms of income and realisable assets.

http://www.welcomehomeloan.co.nz

Matthew Smith, Housing NZ senior manager, financial products.

Now that you need a 10 per cent deposit for KiwiSaver and the Welcome Home Loan - what can I use as a deposit?

Should I draw down on my credit card or borrow money from a finance company to help with my deposit?

No. With Welcome Home Loans you cannot borrow the deposit.

Any existing loans will be taken into account by the bank in the serviceability assessment.

Besides, at credit card or finance company interest rates, a prudent financial adviser would never advise you to consider this approach.

Matthew Smith, Housing NZ senior manager, financial products.

I just want to know what happens to my KiwiSaver if something happens to me.

Will it automatically be given to my wife?

If you pass away while you are a member of a KiwiSaver Scheme, upon application to that scheme, your full account balance will be paid to your estate.

You can't nominate beneficiaries to receive your funds directly from your KiwiSaver Scheme; your provider must always pay it to your estate.

If you want particular people to receive the proceeds of your KiwiSaver account, you should (if you haven't already) make a will and specify who you want to receive those proceeds.

You should also let them know who your KiwiSaver provider is as they will need to contact them to discuss the documentation required to release the funds in your account.

Note that if your account balance is less than $15,000, your provider can make the payment to an authorised person (for example a surviving spouse or partner) without requiring probate or letters of administration.

Joe Bishop, Gareth Morgan Investments head of retail wealth and marketing.

Disclaimer: Information provided is stated accurately to the best of the respondent's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice specific to their situation before making an investment decision.

- NZ Herald

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