How to nail your mortgage application.
- TheLendingTeam
- 4 days ago
- 3 min read
Dreaming of ditching the rent trap and planting roots in your own patch? Our financial adviser David Gribble shares his top tips to nailing your mortgage application.
Whether your dream is a townhouse in Hobsonville or a villa in Beachhaven, getting your first home loan approved is less about luck and more about strategy.
Reorganise your Debt
Before we start talking to a lender, we need to clean up your financial backyard. That means dealing with your “unsecured debt”, i.e. credit cards, personal loans, Afterpay, etc…
Why? Because banks don’t just look at your income, they will assess this versus your liabilities and outgoings. If you’re juggling multiple repayments, they could assume that you’re one unexpected bill away from a problem.
If you have time, read through “The Barefoot Investor” by Scott Pape, it has some really good tips for getting on top of your debts. If you have multiple debts, he recommends trying to secure lower rates for each (rather than just consolidating), and knocking them off from smallest to biggest. Your adviser can talk you through the strategy and how it may work for you depending on your circumstances.
These debts won’t necessarily stop you from applying and getting approved for a loan, but managing them well can make your application for a home easier for a bank to say yes!
Use Credit Card Balance Transfers - Wisely
Here’s where you can get clever but you need to be strategic. If you’ve got credit card debt, you don’t just have to chip away at it with minimum payments. Instead, we may consider a balance transfer, a tool that lets you move your debt to a new card with a lower (or even 0%) interest rate. (Beware: These will always have a limited window (usually 6 to 12 months) to eliminate that debt before the interest rate jumps). The trick is to do the balance transfer and cut the new card up, then set a plan to pay off before the end of the term. Even if you don’t get there, the banks will love that you have made an effort.
I use MoneyHub’s Balance Transfer Credit Card Guide when I am looking at up to date options. It will compare the best deals at the moment, explain the fine print, and help you avoid the traps.
Note: Moneyhub is great for all sorts of things, like comparing your power plans, internet, Kiwisaver, etc…
Build a Bulletproof Budget
One of the other tricks that we use (and the banks will also love) is to live like you have a mortgage before you have a mortgage. Work out how much your new mortgage, rates and insurance payments will be, minus what you are currently paying in rent, and save this into a savings account called “House Savings”.
An example of how this works: Your new mortgage payments may be $720 per week, insurance and rates $100 = $820 per week, minus your current rent of $600 per week = Savings of $220 per week.
No downside here, you get used to life as a homeowner, look great for the banks and build a bigger deposit. When lenders see consistent saving behaviour, they see discipline. And discipline gets you a YES.
Track your spending, cut out unnecessary costs, prepare in advance of your application!
Prep Your Paperwork Like a Pro
When you are ready to go, the Lenders want to see, 3 months of bank statements, proof of income (payslips or tax returns), a breakdown of your debts and expenses, and evidence of your deposit (Savings in an account, Kiwisaver, or even a gift). The Lending Team can help you with getting all this ready.
Note: If you’ve got a KiwiSaver, check if you’re eligible for a first-home withdrawal through your provider.
My Final Thoughts: Don’t Just Apply, Strategise
This is about showing the bank that you’re a low-risk, high-value borrower.
Manage your unsecured debts, use balance transfers smartly, and build a budget that proves you’re ready. All this will help towards your first YES!
Book an appointment to see one of our team, so we can guide you through the process and show the bank why you deserve it.