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Buy now, pay later for home buyers

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Note that the average salary in NZ according to website http://www.salaries.co.nz/ is just under $50,000 (see below)

 

Total average weekly earnings(*) according to the Quarterly Employment Survey (QES) were $965.28 as of June 2010. Average earnings for men were $1063.08 per week, and for women $858.85 per week.

 

*Total earnings include overtime and benefits

 

As you can see the Housing Minister in NZ is actually targeting average wage earners, not "lower income earners" as the media would have you believe. This of course assumes a two income family, both of whom have a full time income. Oh, and those lower income earners who can afford the repayments can apply too!

 

Lets hope for their sake the land in the scummier suburbs of NZ appreciates in value and of course that the interest rate they agree to today doesn't appear to be cripplingly high a couple of years from now.

 

The Minister is trying his best, but I think he needs to get different advisers. I'd hope that they will eventually see that supplementing rents was a bad idea. Given the HUGE amount of money, millions each week, I'd say they are desperately trying to undo the damage that government intervention inevitably brings without throwing people into the street.

 

 

http://www.stuff.co.nz/national/politics/4...-housing-scheme

 

Buy now, pay later in Government housing scheme

By ANDREA VANCE

Last updated 13:00 11/10/2010

 

First-time buyers and low income families can build or buy their own home and defer payment on the land under a new Government scheme.

 

Crown or Housing New Zealand land on thirty sites has been made available for the Gateway Housing Assistance Scheme.

 

Housing Minister Phil Heatley said payment on the land can be deferred for up to 10 years.

 

"This ten-year period allows people on lower incomes to concentrate on designing and building, or buying, their homes before they assume the additional burden of paying for the land," Mr Heatley said.

 

Community housing organisations are being actively targeted for the scheme, he said. They will be able to develop the land and use the favourable capital and interest repayment terms to build more affordable housing.

 

Mr Heatley launched the scheme in Porirua, where Habitat for Humanity has undertaken to develop two sections in Beauzami Crescent into three, to create affordable housing opportunities.

 

Individuals, couples or householders who are first time buyers or on less than $100,000 for two people or $140,000 for three or more.

 

They must also be 18 years old, a New Zealand citizen and be able to get a loan to pay for the home.

 

The purchaser must also agree to live in the home for 10 years and have a ten per cent deposit on the house cost.

 

There are two types of interest on the land - a fixed rate, set at three per cent and calculated annually and added to the original balance, and the second type of interest which is not payable for the first five years.

 

In years six and seven interest is charged at one per cent of the original amount, at three per cent for years eight and nine and fiver percent for year ten.

 

After 10 years, buyers must start making payments for the land, probably my refinancing through their bank or mortgage lender.

 

Three of the sites are available in Porirua, and 17 in Hobsonville, Auckland.

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Government distorts market. Can't quite put my finger on it, but I'm sure I've seen this somewhere before. <_<

 

Never mind, I'm sure it will do wonders to balance the NZ economy.

 

 

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Note that the average salary in NZ according to website http://www.salaries.co.nz/ is just under $50,000 (see below)

 

As you can see the Housing Minister in NZ is actually targeting average wage earners, not "lower income earners" as the media would have you believe. This of course assumes a two income family, both of whom have a full time income. Oh, and those lower income earners who can afford the repayments can apply too!

if they can really afford it, they will be able to come up with a down payment and have skin in the game

 

"a ten per cent deposit on the house cost"

 

sounds like an option premium, not a proper downpayment

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