As many mortgage lenders tighten up their criteria for would-be borrowers, it might seem the goalposts are being edged further and further away for people wanting to buy their first home. But, provided a buyer meets the criteria and is able to service the loan repayments, a Welcome Home Loan offers a way to get into the property market with little or no deposit.
Welcome Home Loans allow banks to take a punt on borrowers they would not normally lend to. The loans are backed by the Housing New Zealand Corporation. While Housing NZ is not the lender of the loans, they provide mortgage insurance to those doing the lending. That allows the lenders to feel a lot more comfortable about dealing with people with small deposits. “This reduces the risk to the lender and enables them to lend to people with little or no deposit, yet who are able to afford repaying the loan,” says Craig Gillespie, Manager, Home Ownership, Housing New Zealand.
But it’s not for everyone: If there are two people borrowing money, the maximum they can earn as a household is $85,000. If there are three or more borrowers, the maximum household income is $120,000. Borrowers can borrow up to $200,000 with no deposit and then up to $280,000 with 15% of the amount over $200,000. So, if they were borrowing the full $280,000 they would need $12,000 deposit. The deposit can be gifted but cannot be lent.
