Applying for a Mortgage

Lenders look at four key areas when making an assessment: Character, Capacity, Capital, and Collateral. Collectively, these help the lender determine the overall 'risk factor' in providing you with a mortgage. Understanding these key areas and ensuring that you present each in the best light possible, should have a positive effect on your mortgage application.


This is essentially determined by reviewing your credit report and bank statements. Payment defaults, debt collections and gambling transactions normally have a serious impact on mortgage applications. Having a large number of credit enquiries (by credit providers when you apply for credit) could suggest that you have an appetite for debt, which can also have a detrimental effect on your mortgage application.


Each bank has their own way of calculating your ability to meet all your current and proposed obligations. However, all assessments factor in some allowance for a potential increase in your expenses (e.g. an increase in interest rates). Again, having a large number of short-term debts could suggest an appetite for debt - increasing the risk for lenders.


This is your deposit and how you came to have it. E.g. genuine savings, KiwiSaver, a gift or loan. When purchasing a home, it’s likely that your current rent will be less than the proposed mortgage and other related expenses, so being able to prove your ability to save money, will help reduce the risk factor for lenders.

Your Collateral

Lenders evaluate the value and condition of the property to ensure it will be appropriate for security against the home loan. Buildings made of certain materials (e.g. plaster, monolithic cladding), or of a certain age, could require additional documentation to confirm their condition - e.g. Builders Report (building inspection).

Meeting the Conditions

Banks/lenders will often provide an approval subject to meeting some additional conditions. These may need to be met before settlement (e.g. provide further documents to support your application), or after settlement (e.g. reduction of debt, improvements to the property).

Confirming the Loan Account Structure

Once all conditions have been met and prior to documents being sent to your Solicitor, you will need to determine how you want your loan to be structured.

A good loan structure should be appropriate to your current and forecasted circumstances. It should also allow you to:

  • Repay the loan faster than required
  • Reduce the impact of a potential interest rate increase
  • Use an assortment of mortgage products and fixed terms

Completing Settlement

Following confirmation of your account structure, the loan documents will be ordered and forwarded (normally electronically) to your Solicitor for you to sign. By this point, you should have had various conversations with the Solicitor and be able to complete this step relatively quickly.

Most mortgage providers offer the same products and services. But, there are some small differences in how they assess your application or in the features of the mortgage or loan account. This is one of many reasons why we recommend you seek assistance from a Mortgage Adviser.

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