Before we get into it: this article is general information only and doesn’t take into account your personal financial situation, goals, or needs. It shouldn’t be treated as financial advice. For guidance specific to your circumstances, talk to a licensed financial adviser.
I ask people what’s stopping them from buying a home. Nine times out of ten, the answer is some version of “I’ve got too much debt.” Fair enough. It’s the story we’re told. Pay everything off, then start thinking about a mortgage.
Except that’s not actually how it works. Debt isn’t automatically the problem. How it’s managed is. A lender doesn’t just look at whether you owe money. They look at what kind of debt it is, and how you’ve handled it. Then they check what it does to your numbers when they work out what you can actually service.
Over the next six Fridays, we’re going to pull that apart piece by piece. Here’s what’s coming.
Good debt vs bad debt
Not all debt hits your application the same way. Some of it can genuinely work in your favour. We’ll break down what separates the two, and why “all debt is bad” is outdated thinking.
Are personal loans really that bad?
Personal loans have a reputation. Whether that’s deserved depends on what the loan was for. It also comes down to how it’s been managed, not the fact that it exists.
Is your mortgage an asset?
This one surprises people. Your own home doesn’t generate income, which is the real test of an asset in my opinion. An investment property mortgage is a completely different conversation.
Vehicle financing
A car loan feels routine. It’s also one of the most common things that quietly trips up a pre-approval, often at exactly the wrong time.
Getting out of debt without wrecking your deposit timeline
Paying down debt and saving a deposit can feel like a tug of war. It doesn’t have to be, if you sequence it properly.
Debt consolidation as a strategy
Consolidation gets sold as a fresh start. Sometimes it is. Sometimes it’s just moving the same problem somewhere else, and lenders can tell the difference.
None of this is about shaming debt or pretending it doesn’t matter. It’s about understanding how it’s actually assessed, so you’re not guessing. That way, you’re not ruling yourself out of a conversation you might actually be ready to have.
See you on Friday for part one: good debt vs bad debt.
Want to talk about your own situation now, rather than wait for the series?
This is general education, but your circumstances aren’t general. Want to go through your own numbers and what they actually mean for a mortgage application? I’m happy to have that conversation. As a mortgage adviser operating under Guardian Smith’s FAP (FSP1002543, individual registration FSP1012174), I can walk you through it properly. No obligation.
Call 0226584350 or email chris@guardiansmith.co.nz to book a time.
— Chris Thompson
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