Most first-home buyers make at least one mistake during the mortgage process. That’s not a criticism. It reflects how complex the process is and how little formal education most people receive before they need to navigate it. The good news is that most of these mistakes are avoidable once you know what to look for.
Going Straight to Your Bank Without Comparing Options
Going directly to your existing bank is the default move for most buyers. Familiarity makes it feel like the natural starting point. But your bank can only offer their own products, and being a long-term customer doesn’t automatically mean you’ll get a better rate or better terms.
Comparing options, whether directly or through a mortgage adviser, gives you a broader view of what’s available and whether your bank’s offer is genuinely competitive. This costs nothing and can save thousands over the life of a loan.
Applying Too Early or Too Late
Seeking pre-approval six or twelve months before you’re genuinely ready to buy can work against you. Pre-approvals lapse, and multiple credit enquiries in a short period can affect your credit score. But waiting until you’ve found a property before seeking pre-approval is equally risky. You’ll have no confirmed budget, no ability to move quickly, and limited credibility in a competitive market.
The right time to get pre-approved is when you have a stable financial position, a clear savings trajectory, and a realistic purchase timeline, typically one to three months before you plan to start making offers.
Underestimating the Full Cost of Buying
The deposit is only one part of the upfront cost. Buyers should also budget an estimated $5,000 for additional purchase costs such as legal fees, a building inspection, a LIM report, a registered valuation if required, and moving costs.
Understanding your full cash requirement before you begin can help avoid the unpleasant surprise of having a sufficient deposit, but not enough cash set aside for the wider costs of buying. The NextMove Readiness Score can help you understand how ready a qualified financial adviser considers you to take the next step, with a personalised summary based on the answers you provide.
Making Major Financial Changes During the Process
Lenders assess your financial position at application and can recheck before settlement. Changing jobs, taking on new debt, applying for new credit, or making large unexplained cash transactions between pre-approval and settlement can trigger a reassessment and potentially affect your approval.
If you’re considering any significant financial change during this period — a new car on finance, a job move, or a large purchase on credit – talk to your mortgage adviser before proceeding. What feels like an unrelated decision can have direct consequences for your loan.
Removing the Finance Condition Too Early
Competitive markets can create pressure to go unconditional quickly to appeal to a vendor. But going unconditional on the finance condition before formal loan approval is confirmed is a serious risk. If the lender later declines the application due to a valuation shortfall, a property concern, or a change in your circumstances, you remain legally obligated to complete the purchase.
A pre-approval is not a confirmed loan. Formal approval only comes once the lender has assessed the specific property. Never remove your finance condition based on pre-approval alone. For more on how the sale and purchase agreement works, including how conditions protect you, see our dedicated guide.
Not Thinking About Loan Structure
Many first home buyers focus entirely on securing the loan and give little thought to how it’s put together. The split between fixed and floating, the loan term, and whether features like a revolving credit or offset account would suit their situation are all worth thinking through before the loan settles.
A well-structured mortgage can save a meaningful amount in interest over time and give you more flexibility as your circumstances change. This is one of the areas where a good mortgage adviser adds genuine value well beyond just submitting the paperwork.
The information in this article is general and educational only — it’s not financial advice. For advice tailored to your situation, we can connect you with a licensed mortgage adviser. Email info@nextmoveproperty.co.nz to get started.