Most people assume getting a mortgage mainly comes down to income and a deposit. But what lenders look at for a mortgage goes much deeper. Spending habits, existing debts, employment type, and even the property itself can all shape how an application gets assessed. Knowing what lenders want to see helps buyers avoid surprises and sometimes makes a real difference to the outcome.
Income and Employment
The first thing a lender wants to know is whether you can comfortably service the loan over time. For salaried employees, lenders typically use recent payslips, bank statements, or employer confirmation to make that call.
For self-employed borrowers, the process runs deeper. Most lenders want at least two years of financial accounts and tax returns to get a clear picture of how stable the business income is.
Lenders favour stability. Permanent full-time employment is the simplest to assess. Casual work, contracting, commission-based roles, or a recent move into self-employment can complicate things, though different lenders take different views. Someone who just stepped into a higher-paying role but is still inside a probation period, for example, may still look like a risk to some lenders even if the income is strong.
Expenses and Financial Commitments
Banks take a close look at how you manage money day-to-day. Expense assessments became a much bigger focus over recent years, which is why borrowers are often caught off guard by how detailed the bank statement review gets.
Lenders factor in regular living costs, existing loan repayments, hire-purchase agreements, credit card limits, and buy-now-pay-later facilities. One thing that surprises many buyers is how credit cards get treated.
Credit card limits count at their full approved amount, not the current balance. So, a card with a $10,000 limit and a $0 balance can still reduce your borrowing capacity. As a rough guide, every $1,000 of available credit can reduce borrowing power by around $5,000, depending on the lender. This is why closing or reducing unused credit facilities before applying can sometimes make a meaningful difference.
Credit History
Your credit history gives lenders a picture of how you’ve managed debt over time, repayment history, defaults, missed payments, credit enquiries, and any past financial issues. A clean track record is what lenders want to see. Even small, missed payments on utilities, phone plans, or finance accounts can affect an application.
Before applying, many borrowers check their credit report through providers like Centrix or Equifax. It’s a straightforward way to catch unexpected issues or inaccuracies before they become a problem.
Deposit and LVR
Your deposit size plays a major role in how lenders weigh up risk. Lenders measure this through the loan-to-value ratio (LVR). Standard owner-occupied lending in New Zealand generally requires at least a 20 percent deposit. Lending above 80 percent LVR is possible, but it sits within Reserve Bank restrictions and individual lender limits.
Buyers with smaller deposits may face higher interest rates, low-equity margins, or additional lending conditions. Some buyers use products like the First Home Loan underwritten by Kainga Ora as an alternative pathway. Lenders also pay attention to where the deposit came from. Genuine savings built up over time tend to carry more weight than a lump sum appearing shortly before an application. Our borrowing calculator is a useful starting point for getting a sense of where your numbers sit.
The Property Itself
A lot of buyers focus entirely on their own financial position, but the property matters too. Some homes carry a higher risk for lenders even when the borrower’s finances are solid. Leasehold titles, very small apartments, certain construction types, and properties with known weathertightness issues can all create lending restrictions.
Lenders may also require a registered valuation depending on the purchase price or deposit size. If that valuation comes in below the agreed purchase price, buyers may need to bridge the gap with an additional deposit. It’s another reason why understanding what lenders look at for a mortgage, not just your income, helps you go into the process better prepared.
If you’re researching suburbs or want to understand the market you’re buying into, visit nextmoveproperty.co.nz to explore suburb-level insights and buyer tools.
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.