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  • Welcome home loans appear broken


    I have a friend I'm helping buy a home, and she, in theory qualifies for the "welcome home loan" scheme.

    So off she toddles to Kiwibank to see what's what.

    Now, this is in Wellington, so the scheme will go up to a house price of $350K....BUT....

    You have to have an income of $85K or less to qualify (tick), you have to have some deopsit of your own to get over $200K purchase price (tick), so she qualifies... right?


    Now in Wellington you need $250K to really get much at all, but at this level Kiwibank calculate the debt servicing, and decline the loan! (Welcome home loans seem to have an invisible risk flag in the bank's calculations).

    So, with a 10% deposit in cash and a target price of $250K, Kiwibank will not lend without a higher salary!. "How much salary do you need?" we enquire with some curiosity.
    "Over $90K".
    "but the Scheme caps out at $85K"
    "Oh... ur... erm... yes it does."
    "So if we forget the Welcome home loan scheme, can we borrow $225K with a cash deposit of $25K on her salary of below $85K?"
    "Um... tappey tappy tap... the computer says yes
    "so the only way to qualify for the welcome home loan is to have a high enough salary to disqualify yourself for it?"
    "Um... it appears so.... no wait.. if you had a really big deposit you'd be OK"
    "If we had a really big deposit we wouldn't need the Welcome home loan scheme to get a big enough deposit... would we?"
    "Um... no"
    "how many Welcome home loans have you personally written as a mortgage salesperson?"

    Anyone out there ever actually seem one of these go through?
    Last edited by WGN ex-property manager; 22-06-2011, 03:18 PM. Reason: spelling

  • #2
    Brilliant Robin; brilliant.

    Joseph Heller would be proud.


    • #3
      Yes great detective work Robin...I am now clicking the share on Facebook so this discussion is seen by my friends.

      Priceless! And I wonder how many other 'schemes' are similar - great for the politicians to ramble on about but that's where it ends.


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      • #4
        I recall something pathetic like 1200 or so of these have been written over the entire length of the scheme.


        • #5
          Lolz .............


          • #6
            A colleague said it was only set up to flog off all the state housing the Govt wanted to get rid of - in areas like Porirua etc. That would certainly explain the qualification threshold for it I guess.


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            • #7
              I brought my first house with my partner using the welcome home loan scheme about 1.5 years ago. It was great!! We did use a broker though. Have recently came off it and refinanced to buy another property with no money down, again we used a broker.

              My advice... use a broker!


              • #8
                Couldn't agree more to these comments. We have completed a grand total of zero welcome home loans in a firm of 6 mortgage brokers. You would freak if you saw the paperwork. Thank goodness most lenders do reasonable 95% deals for first home buyers who do seem to be very much out in force at the moment


                • #9
                  Hi Robin, I feel you are jumping to conclusions without providing detailed information. If her income is around 85k, she should be easily able to get a loan for 225k. Without her actual financial details, I can only guess she has either too much in way of short term debts, or too many kids.
                  Welcome home loan is targeted for first home purchasers, low income people only, it's not a one fits all loan scheme. If your friend fit under standard home loan, as per what you implied, she should not be applying via Welcome anyway. With the income cap of 85k, that's reasonable I feel. Imgaine someone earns more than 85k, you wonder why they have not saved with that income?
                  I feel, Welcome is a fantastic scheme to help first home owners into a home, on a national scale.


                  • #10
                    It ain't a national scale if city folk are excluded, EP.


                    • #11
                      Well, it depends on expectations. If I were the first home buyer, with 350k price cap in Wellington, there are many options, such as parts of Karori, Miramar, Newlands, J'ville, some parts of Lower Hutt or Porirua. I feel nowadays, some first home buyers are expecting too much and little contribution. Some people want the best house in the best street with no or little deposit, while loaded with short term debts, they should be getting their priority right.


                      • #12
                        No Kids, No consumer debt.

                        Only looking to buy a $250K house (a realistic target), and use the welcome home loan to preserve her cash deposit, so that could be used to upgrade the house.

                        Without the welcome home loan she qualifies for a loan. With the welcome home loan she does not!

                        Go figure


                        • #13
                          I can't figure out. In fact, I'm extremely puzzled. If she qualifies for a standard loan, she does not quality for Welcome home loan. In this case, she doesn't qualify for Welcome.

                          On the other hand, there is the issue of servicing calculation. For a small loan of 225k, what makes her not able to afford it if she doesn't have debts or kids? I think something is lost in translation. How much is her income?


                          • #14
                            Also, after further checking, Welcome Home Loan does not use brokers at all, this answers the question as to why brokers have little to do with it. You'll need to deal
                            with the banks directly, being Kiwibank, TSB and SBS, as I understand.


                            • #15
                              Always use a qualified Broker, pays off every time!
                              Financial Paramedics