Applying for a home loan

Here’s what you need to know about applying for a home loan (often called a mortgage).

4 minute read

Once you’ve got a deposit together (in most cases, 20% of the property’s value), it’s a good idea to apply for conditional approval for a home loan, so you know how much you can borrow.

When you apply for a home loan, or for a conditional approval (also called pre-approval), you’ll be asked a lot about your finances, including your deposit, income, expenses, and debts. If you’ve applied for a home loan before, you’ll probably find you’ll need to provide even more details this time as the borrowing rules have changed.

These changes apply to all New Zealand lenders, like banks, and have been designed to prevent people from borrowing more than they can afford, and subsequently getting into financial difficulty. Don’t let these new rules stop you from starting to plan to buy a house or renovate. But you’ll need to be aware that some of the changes mean you’ll be asked more questions about your regular and ongoing payments, as well as your income, and you’ll need to provide more proof and documentation to back this up. Here’s how to help make that process smoother.

1. Build a savings history

Start saving regularly towards your deposit, it will show you have the commitment you need for a mortgage, which may make it easier for you to be approved. However, keep in mind if you intend to continue saving after you take out your loan, like for holidays, this may count as an additional expense.  

2. Check your credit rating

If you’ve ever been late on a loan payment, missed a phone bill, or gone into overdraft, for example, it might have negatively affected your credit score. Find out how to clean up your credit score.

3. Pay off your debt

Any debts you have can affect the amount you can borrow, so try to pay off what you can on your credit card, personal loan, or ‘buy now, pay later’ purchases. It’s also a good idea to cancel credit cards you don’t use, and lower your credit limit if it’s high.

4. Create a budget

You’re going to be asked a lot of details about your finances, so it’s important to know the money that’s coming in and going out. We all have one-offs that crop up occasionally – like fixing the car or booking a flight to catch up with family. But you’ll need to look at your regular expenses so you can understand where the rest of your money generally goes.

Think about whether your current spending habits will allow you to comfortably make your home loan repayments, keeping in mind you’ll need a reasonable amount of money left over each month to cover things like day-to-day spending, rates and insurance, savings, and one-off or unexpected expenses. You’ll also need to consider what your home loan repayments might go up to if interest rates rise (the bank will factor this into their decision).

If not, look at whether you can make any spending cuts, like ditching unused gym memberships. But be realistic about the lifestyle you want to lead – now and well into the future. Keep in mind, the new rules require the lending decision to be based on your current spending behaviour (among other things), rather than what you plan to do once you’ve got the loan. So, it could be a good idea to start living like you already have your home loan for at least three months before your application. It’s also a good way to cut unnecessary costs and get yourself into a better financial position so you’re not taking on more than you can afford. But be careful not to make drastic cuts as, when we assess your application, we’ll take into account what a reasonable cost of living would be for a person in similar circumstances to you.

What you'll need to apply

When you apply for a BNZ home loan, there are a few things you’ll need to provide as part of your application, like proof of deposit, bank history, and identification. Find out more about what you’ll need to show us.

Think about your loan structure

You’ll finalise the details of your home loan with your banker later on, but it’s good to start thinking about how you might structure your loan. There are two main ways you can set up your home loan: fixed or floating, or a combination of both – you'll find more about the ins and outs of both options on our help and support page.

After you apply, what’s next?

After you apply for conditional approval, your application will be assessed taking into account the new borrowing rules, plus any other criteria specific to your lender. Keep in mind some banks have changed what they look at when it comes to how much mortgage debt you have (how much you owe, or plan to owe) as a proportion of how much you earn. Again, don’t let this put you off your house-buying or renovation plans – you just need to prove you’re in a good financial position to borrow.

The changes mean it also takes more time to process home loan applications than it used to, so keep this in mind when thinking about when to apply.

If your application’s successful, you’ll be given a conditional approval. This means you’re eligible for a home loan (subject to conditions), and you now have a clear idea of how much you can borrow.

Related articles

Related products

Related tools

Talk to us about mortgages

Find out more

This article is solely for information purposes and is not intended to be advice with respect to any matter discussed in it. If you need help, please contact BNZ or your professional adviser. Neither BNZ nor any person involved in the material accepts any liability for any direct or indirect loss or damage arising out of the use of, or reliance on, all or any part of the content.

All home loans are subject to our lending criteria (including minimum equity requirements), terms and fees (including an establishment fee of up to $150).