Housing Minister Phil Heatley has announced that from today first home buyers in higher priced areas of New Zealand will be able to borrow more under the government's Welcome Home Loan scheme, as long as they can service those borrowings.
As signalled in August the amount that can be borrowed under the Crown-funded mortgage insurance scheme has increased to $350,000 in selected areas.
"We decided to increase the maximum amount that can be borrowed from $280,000 to $350,000 in recognition of the changing market and the need to help first home buyers in high-priced areas such as Auckland and Wellington," Mr Heatley said.
"The change reflects the fact that bank deposit requirements have increased over the past 12 to 18 months."
No deposit is required under a Welcome Home Loan if you are borrowing $200,000 or less. Any amount over $200,000 will need a deposit equal to 15 per cent of the amount over $200,000.
"Borrowers will still need to prove their ability to service a home loan before being accepted.
"The nature of a Welcome Home Loan means that someone wanting to borrow $350,000 will only need to pay a $22,500 deposit," explained Mr Heatley.
The new $350,000 limit will be available in Territorial Local Authorities where the lower quartile house price over the past year has been over $280,000. The list of areas where the limit has changed can be found on the Welcome Home Loan website: www.welcomehomeloan.co.nz
Housing New Zealand will review these prices annually and change the list of Territorial Local Authorities accordingly.
The Welcome Home Loan was introduced in 2003. Between its inception and October 2009 a total of 5,402 Welcome Home Loans have been settled, translating into access to home finance of $910.6 million.
The maximum income requirement for eligibility stays the same:
- one or two borrowers can have a maximum household income of $85,000 per annum
- three or more borrowers can have a maximum household income of $120,000
No deposit is required for $200,000 or less. Any sum over $200,000 requires a deposit of 15 per cent of the amount over $200,000. For example if you want a loan for $280,000, you will need a deposit equal to 15 per cent of $80,000, which is $12,000. If you want a loan for $350,000, you will need a deposit of 15 per cent of $150,000, which is $22,500.
Selected banks and credit unions issue the loan, and Housing New Zealand insures the loan for the bank and credit union.