New loan deal for section buying

Press, Volume CXV, Issue 33804, 29 March 1975, Page 16

New loan deal for section buying

CXeu Zealand Press Association) WELLINGTON, March 28. New Housing Corporation loans available from April 20 to buy private sections were intended for young couples seeking their first home, said the Minister of Housing (Mr Douglas) today.

Eligibility for the loans of up to two-thirds of the cost of sections coming wthin corporation price limits would not be subject to income; limits. ■‘Eligibility will be based! first and foremost on the need l of the applicants for finance* to get them towards a first; home.” Mr Douglas said. Generally, only first-home I seekers would be eligible, including couples intending; marriage within a year or; two but e:tcluding people who; had previously owned a sec-1 tion or a share in a home. i The repayment term for a; section loan by itself would; be 10 years, but where a cor-; poration building loan was; also obtained later, the two*

would be combined and re;paid over the normal home purchase loan term of up to 40 rears. “This in effect will repreisent a big sten towards a one- ; mortgage situation.” Mr Douglas said. “The ideal of i the sections loans is to enable I young couples with limited , savings to invest them in a I section now and freeze its price. Having secured a sec- * tion at a fixed price they can i then save towards the cost of (a home with greater cerjtainty of its total cost.” DEPOSIT NEEDED * A cash deposit of the difference between the corporai tion section loan and its ; actual price would be I required. j This could include family (benefit capitalisation but not i secondary borrowing.

Price limits on sections, qualifying for loans would; vary from area to area, and could be different, in separate parts of the same city. The limits were intended tn aid land price stabilisation.! LIMITS VARY Houses built on corpora-! tion-financed sections would; have to come within limits on the total cost of the house and section to qualify for a corporation building loan. "If, for example, an Auckland applicant buys a section worth $6BOO. then the house he builds will have to cost within $18,200 to stay inside the corporation’s total ingoing cost limit of $25,000 for metropolitan Auckland.” Mr Douglas said. Ingoing* limits varied from $23,000 in most parts of the country to $28,000 in part of Wellington. Sections tied to builder developers—that is. sold on condition that the purchaser; also buys a house from the developer concerned—would he ineligible unless the total contract price of the house j and section was approved by: the corporation.

INCOME RANGE Interest on sections loans would be 5) per cent for those on incomes of less than $lOO a week, plus $5 for each dependent child, or 7 per cent for those above. Earnings would be based on a 40-hour week and exclude overtime. People wishing to sell a section before the loan raised for it had been repaid would be required to offer it to the corporation for possible purchase first. The loan would otherwise have to be repaid before sale, Mr Douglas said.