Enhanced assistance through the Welcome Home Loan programme -based on the mortgage insurance scheme piloted through Kiwibank - is being introduced today.
Eligibility has been widened and new home loan providers invited to take part in the programme in order to offer home ownership assistance to 5,000 primarily first home buyers a year by 2007.
"The Welcome Home Loan is an important step in our efforts to help more New Zealanders achieve the Kiwi dream of home ownership," Steve Maharey said.
With a Welcome Home Loan people can borrow most or all of the cost of a house. For houses up to $150,000, eligible borrowers do not require a deposit.
For houses costing more than that, they need to contribute a 5% deposit. Depending on their ability to meet repayments, people can borrow up to $280,000 to purchase their new home.
Welcome Home Loans will be available for households earning up to $85,000 a year, or up to $120,000 if there are three or more borrowers in the household (these thresholds have been raised from $65,000 and $100,000 respectively).
Loan applicants need to have a good credit history, not already own a home and must live in the house they buy.
While the pilot scheme was available only through Kiwibank, Welcome Home Loans will now also be offered by other home loan providers. Two new lenders - TSB Bank and the Nelson Building Society - have already signed on with Housing New Zealand to deliver Welcome Home Loans. Discussions are now underway with several other lenders to offer the loans.
"The Welcome Home Loan is the part of this government's efforts to secure financial independence for low to middle income New Zealanders. Already, nearly 1,000 families have moved into their own homes since the scheme's pilot began in September 2003. This will be complemented by the home-ownership component of KiwiSaver when it rolls out," Maharey said.
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