Mortgage applications: The recipe for success

Luke Parker
Mortgage applications: The recipe for success

Applying for a mortgage can be daunting and confusing for some, especially the first time. Information and background can be required and who is best to talk to?

REDnews asked Squirrel Mortgage Adviser, Lindsay Hill, the recipe for a successful home loan application.

Be honest

Hiding information or non-disclosure is a big no-no, so make sure when applying you put your full financial position on the application form. Banks can access systems that tell them what credit facilities (credit cards, expensive short-term debt-store cards, hire purchases etc) you have, and if they discover you haven’t disclosed any debt facilities it will make getting finance harder.

SEE ALSO: 6 tips to negotiating a better price for your house


Pay down your debt

If you have $50,000 of credit card debt, and a deposit of $25,000, questions will be asked about whether you’ll be able to afford your new home loan. Keep your debt to a minimum and the bank could review your loan application a lot more positively.



Make sure you’ve run a budget before applying for a loan to help you determine whether you can afford not just the loan, but the other costs that come with owning a property (rates, insurance, maintenance etc).



One of the things the bank considers before lending you money is if you can afford to meet the proposed loan payments.

To demonstrate this, you should consider saving regularly the difference between your current rent and the proposed loan payments. Not only will this demonstrate that you can afford the loan but you’ll be helping to prove to yourself that you are ready to buy a house.

You could also look at taking advantage of any special savings and home loan packages that are available.



The Reserve Bank has put LVR ‘speed limits’ in place for banks so that no more than 10% of their new lending can be for those with deposits of less than 20%. This means banks can still lend to you if you don’t have a 20% deposit as long as they have not reached their capacity allowed by regulation.If you have a 20% deposit, it is likely to be much easier to get a home loan.

Even if you don’t have a 20% deposit, you might want to consider discussing the possibility of using a parental guarantee to help get you to a 20% equity position.



Make sure you take advice from independent advisors at all stages of the house buying/home loan process. This can include your lawyer, a mortgage adviser, authorised financial adviser, tax adviser, insurance broker, building inspector and registered valuer.

SEE ALSO: 6 tips to negotiating a better price for your house

Finding it difficult to get approved?

  • If it is an issue with the amount of deposit you have you could consider discussing the possibility of involving a parent with a guarantee. Note that this option ties your parents into your property purchase (by having the bank secure a mortgage against their property as well as yours) so doesn’t suit everyone.

  • Consider using your KiwiSaver savings to help – provided you have been a KiwiSaver member for 3 years and are buying your first home, you may be eligible to withdraw your savings (excluding government contributions). In some cases you may also be eligible for the First Home Buyer subsidy. Terms and conditions apply, for more info check Inland Revenue’s KiwiSaver website.

  • If loan servicing is an issue, then demonstrating to the bank that you can afford the payments is key. To do this, for a period of at least 3 months, you’ll need to save the difference between your current rent and the proposed mortgage payments.

  • Have you considered buying a property with someone else like a friend or colleague? Whether they are living in the property with you, or are investing in the property as a silent partner, combining resources may help you get into your home.

  • Have you investigated lending options across a variety of banks? Your current banks’ lending policy may not suit what you want to achieve but another banks’ might. Consider using a mortgage broker for this purpose as they can explore options across a number of lenders, helping to save you from doing all the work.

  • If you have a history of defaulting on loans or other payment commitments, then it is unlikely that any lender will provide finance to you. The first thing you need to do is get your finances under control for a sustained period. 


Looking for a new home?

Westpac has handy tips, info and mortgage calculators to help:


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