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A "financial coaching" company which can avoid new mortgage-lending limits placed on banks is offering 100 per cent finance to families wanting to buy their first home.
But consumers are being urged to look carefully at deals such as those offered by the Mt Wellington-based Welcome Home Foundation.
The Commerce Commission is investigating whether the company is breaching the Fair Trading Act, and Housing New Zealand is looking into its rights over the name of its similarly titled, government-funded Welcome Home Loan package, which has nothing to do with the private company.
Letters landing in Auckland mailboxes from the company are personalised to the occupants of the home, and state that finance is available for a family living on their street to buy their first home.
It is signed Martin Bailey, sponsorship co-ordinator.
Company owner Luke Atkins told the Herald that private lenders fronted up with the finance, but he would not say who they were.
The 30-year mortgages matched ASB bank's published mortgage rates. Interest would be kept by the lender.
The company charged a brokerage fee for the service, but Mr Atkins would not say how much.
Fees for people who defaulted on payments "would be the same or very similar to mainstream bank default provisions", he said.
The company made headlines last month with a mail-drop offering financial coaching.
A spokesman for the Commerce Commission said it had received a complaint about the Welcome Home Foundation "around what the company was offering to customers and what in fact they were delivering".
"The commission is currently assessing that complaint to determine whether we believe there has been a breach of the act."
When Mr Atkins was told about the investigation, he said: "That is news to me. My response is that everything is being done correctly, I am certain any investigation will be procedural and will give us the all-clear."
When asked about the similarity of the name to the Government's programme, Mr Atkins said he had noticed "a little bit of confusion" but only since the Government's package "started getting talked about again in the media" following mortgage-lending changes which came into effect in October.
Mr Atkins said that last week, the company decided to change its name to Home Funding Group to avoid confusion.
A Housing NZ spokeswoman said yesterday: "Yes, we are aware of them and we are talking to them to see if we can resolve it.
"We don't want people to be confused, so hopefully we can come to a resolution."
NZ Institute of Economic Research principal economist Shamubeel Eaqub said private lenders could offer as much finance as they wanted because they were exempt from the Reserve Bank's limits..
"You've got to make sure the organisation you are dealing with is reputable, is sound because you are signing up to a contract that entitles them to a bit of your information and future income."
Mr Atkins is a registered financial services provider, as is the Home Funding Group.
From the Welcome Home Foundation, received by a New Zealand Herald reporter:
"I'm writing to you because in the directory you are listed as living in Kimber Hall Avenue. Our foundation has access to an exclusive 100% finance opportunity to assist some families in the Mt Roskill area to buy their 1st home. One of these opportunities has been reserved for a family in Kimber Hall Avenue and is now available for allocation, hence this letter to you."
- Alanah Eriksen of the New Zealand Herald