Welcome Home Loans; anyone used one?

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Forums › Finance and wealth management › Welcome Home Loans; anyone used one?

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2802 posts

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#967928 16-Jan-2014 08:45

Those criteria are laid out fairly clearly on the site, the idea is that it is for first home buyers only. The insurance makes total sense (although that's another paperwork nightmare as of last year) as the bank doesn't want to risk its house disappearing.

@KnightNZ

timmmay

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#967930 16-Jan-2014 08:49

I'd just like to say congratulations! Also curious about the one and a half statement.

I didn't use a welcome home loan, but my deposit was around the ten percent mark around six years ago. A $400K loan right now will cost $2865 per month to service, in a few years that will probably rise to $3500. I see the welcome loan is limited to a couple who earned $120K or less. If you earned $110K you probably have around $7K per month income after tax, so you'd be left with around $4K per month for living expenses, maintenance, holidays, etc. If you earned $80K you'd be closer to $2333 per month to live off. That's enough to live... but I'm not sure it's enough to live well. My view's skewed by years of contracting rates. Don't underestimate how much maintenance and improvements on houses cost.

Also don't trust a single property inspector, get in someone who's owned old houses for a look around - I'm happy to do that for you if you'd like, you've helped me in the past and I'd like to repay the favor. I wish I'd had someone do that for my house, I like it but I've spent at least $150K on it since I bought it.

Just some thoughts anyway :) Feel free to ignore.

alasta

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#967939 16-Jan-2014 09:09

mattwnz: The problems with renting is that they can ask you to move on.

The flipside of that is that renters who want the freedom to move around - myself included - can do so without having to throw $10k to a real estate agent.

You also can't do with it what you want, and you have to put up with landlords, who may not be helpful if you need to get something done, or fixed.

I have always built up a good relationship with my landlords and they have always been helpful and supportive. Unfortunately the recent trend towards using third party property managers has made this a lot more difficult but there are still private rentals out there.

Klipspringer

2385 posts

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#967969 16-Jan-2014 09:32

I feel that that Welcome Home Loans are discriminating against people like me.

Unfortunately I'm not in the qualifying income group to be eligible for a WHL

Amosnz

567 posts

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#967973 16-Jan-2014 09:40

Welcome home loans also put a cap on how much you can purchase a house for. In New Plymouth I think its 280k, but it varies from area to area. This could affect what area you are able to buy in.

Speedtest

adresdendoll

62 posts

Master Geek

#967999 16-Jan-2014 10:06

My Wife and I used the Welcome Home Loan and Kiwisaver to fully fund the deposit requirements for our first house. The WHL wasn't huge but it was $8k additional for very little extra paper work.
It was actually easier sorting out the WHL than it was to get the Kiwisaver portion sorted in our case.

kingjj

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#968003 16-Jan-2014 10:09

alasta:
mattwnz: The problems with renting is that they can ask you to move on.

The flipside of that is that renters who want the freedom to move around - myself included - can do so without having to throw $10k to a real estate agent.

In this day and age a real estate agent isn't necessary to sell, doing it yourself with the help of a lawyer is easy enough for most people. Heck my mother in law, who is the type of person that double clicks on everything and thinks tool bars are useful, has sold her last 2 houses on her own (including one within a few days for a lot higher than the asking price). Total cost to sell, less than 2 grand. On the flip side again, renters need bond and rent in advance payments upfront to move on...

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nakedmolerat

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#968004 16-Jan-2014 10:10

driller2000:
2. as for "bad idea to borrow money to buy a house" - is there really any alternative for most people? - esp if you don't already have a home / massive wad of cash...frankly that is a meaningless statement for most people.

this will be my last response (not wanting to go too much off topic)

Yes, there are alternatives.

1. Build your own house. You don't have to build everything all at once, but rather do it bit by bit.

2. Save money until you can actually buy house in cash. It takes 30 years to pay off your loan - then your house belongs to you. Or you can save up for 20 years and bought your house at once.

Disrespective

1925 posts

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#968014 16-Jan-2014 10:24

That's interesting to hear how easy it seems to be to get it sorted out. I'll be talking to banks properly over the next few months and perhaps a few mortgage brokers, too. We spoke to Westpac late last year and they didn't even mention them to us so when I looked around again this year I was surprised i'd not heard of it.

We'd be buying in Wellington (Titahi Bay/Whitby to be precise) where the WHL limit is just over $400k. We don't want to buy for more than 375 and these locations can get us a decent house in that price bracket. We'd be looking to have about 40-60k deposit depending on how the next year or so pans out.

I'm working full time (no longer contracting) and my girlfriend will be back at work in a few months in a part time role so she still has time to look after the baby. Our combined income will be about 80k or so depending on how much work she does.

I've helped buy/sell a few houses for family/friends now so am fairly au fait with the processes but more heads is always better when looking at such things.

BTR

1527 posts

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#968047 16-Jan-2014 11:10

Klipspringer: I feel that that Welcome Home Loans are discriminating against people like me.

Unfortunately I'm not in the qualifying income group to be eligible for a WHL

If you are not married or have been in a long term relationship at the time the loan was taken out you can apply for the loan as an individual.

stevenz

2802 posts

Uber Geek

#968074 16-Jan-2014 11:42

Incoming limit for a single person is $80k, for a couple it's $120k. I think he's saying that his income is somewhat above that limit, in which case you should be able to manage a regular loan no worries anyway.

@KnightNZ

khull

1245 posts

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#968079 16-Jan-2014 11:57

Nothing worse than renting and paying off someone else's loan!

Unless you need to be mobile where you can drop everything and just walk out to another life, country or other commitments, then rent. Your post doesn't seem to suggest that so I'd recommend buying a home

If you don't like the property or things don't work out, then you can always sell it - there will be at an expense, don't get me wrong. However if you chose to rent then that money is sunk.

jpoc

1043 posts

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#968155 16-Jan-2014 13:54

nakedmolerat:
kingjj: My 2c: While its hard to argue against saving more of a deposit, with the current property market and ever increasing prices, especially in the entry level market, one may end up saving less than the price increases over time. Obviously you need to make sure you can afford the loan and costs associated with home ownership (rates, insurance, maintenance, improvements etc) but I'm of the opinion that if you find a house in your price range and can get a loan than its best the get on the property ladder sooner rather than later.

If you are a gamble person, yes. 8 years ago my friend in the Ireland was told to buy a house as soon as he graduate. He did just that. 5 years later, his current house price is less than 40% of what he paid. He struggles big time now to service the loan. If you think the house price is always going to go up, then bank is your friend. This is my personal opinion.

It is also a fallacy to believe that you 'own' the house when you have loan to service.

What he said.

We rented a house in Ireland for two years.

My understanding was that a year or so earlier the house had been valued at over 400K Euros and had a near 100% mortgage. When we moved in, the property was valued at around 350K Euros. Two years later, similar houses on the street were being offered at 200K Euros. We had paid 24K Euros to rent an asset which had dropped in value by 150K Euros while were in there. Rent or buy?

The house market in New Zealand looks a lot like the one in Ireland at the peak of the tiger economy period which would be 6 or 7 years ago. At that time, everyone "knew" that prices in Ireland would go on rising forever but the reality was that the Irish market was one shock away from collapse. Ours is too. They got their shock. We may or may not get one here.

Klipspringer

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#968166 16-Jan-2014 14:01

stevenz: Incoming limit for a single person is $80k, for a couple it's $120k. I think he's saying that his income is somewhat above that limit, in which case you should be able to manage a regular loan no worries anyway.

Very true.

What I am saying though is that with the new 20% deposit requirement, people above 80k will need to fork out a hefty deposit. Sure they can afford the repayments, but getting that deposit together is much easier said than done.

If we were looking at buying today we would not be able to afford the 20% deposit. Thank goodness we bought when we did.

20% of $400k is a hefty $80k.

JimmyH

2886 posts

Uber Geek

#968191 16-Jan-2014 14:25

Some advice for the OP, at risk of stating the obvious, make sure you sit down and spreadsheet it properly before you commit.

You need to model some scenarios, to make sure you can cope. The ones that immediately occur to me are:

1. On most predictions interest rates look set to rise by at least 2% over the next two years. To be safe, you need to make sure that you can cope with repayments if rates rise by 3% - either now (if your mortgage is floating), or when it is re-fixed (if it's fixed rate for a period).
2. Home ownership means you wear all the costs. You need enough of a buffer to make sure you can cope with a large unexpected repair bill. Make sure you can cope with say a $3,000 bill for the roof, car, plumbing or whatever if something suddenly goes wrong AND (say) $1000 if the fridge dies.
3. Loss of the 1/2 income for a few months. Say a sick child and the partner planning to work part-time can't?

Also, when you do the budget, don't draw up something that is lunaticly spartan. Otherwise, it will work on paper but probably won't work sustainably in practice. You need to plan on running the heating properly in winter (esp with a child on the way), eating decently, and at least a minimal amount of personal enjoyment/entertainment (a pint on Friday, the occasional movie together or whatever).

If the numbers don't work, you are probably better off renting for a period and trying to save a bigger deposit etc.

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