Common Home Loan Requirements

If you're planning to buy a house in New Zealand, you'll likely need a home loan to finance your purchase. Each lender has its own requirements, but here are some common requirements you'll need to meet in order to qualify for a home loan.

Good Credit Score

Your credit score is a measure of how well you've managed credit in the past. Lenders use your credit score to determine your creditworthiness and assess the risk of lending to you. A good credit score (typically 600 or above) can increase your chances of getting approved for a home loan, while a poor credit score can make it difficult to qualify. Do note that getting credit to increase your credit score isn't how it works in New Zealand.

Stable Income

Lenders want to know that you have a stable source of income that will allow you to make your mortgage payments. You'll need to provide proof of income, such as payslips or tax returns, to show that you can afford the mortgage repayments.

Deposit/Down Payment

In New Zealand, you typically need to have a minimum of 20% of the purchase price as a deposit for an existing home, or 10% for a new build/off-the-plan property. This means if you're buying a $500,000 property, you'll need to have at least $100,000 as a down payment.

Proof of Identity

You'll need to provide proof of your identity, such as a passport or driver's license, to verify your identity and ensure that you're legally allowed to buy property in New Zealand.

Property Valuation

Before approving a home loan, lenders will require a property valuation to ensure that the property is worth the purchase price. The lender will usually arrange for a valuer to assess the property and provide a valuation report. With an off-the-plan new build, you won't need to get a valuation done until just before settlement.

Other Debts

Lenders will also consider your other debts when assessing your ability to make mortgage payments. These can include credit card debt or personal loans. It's important to pay off high-interest debts before applying for a home loan to increase your chances of approval.
In summary, there are a few requirements to qualify for a home loan in NZ. You'll need a good credit score, stable income, at least a 10% deposit (20% for existing), proof of identity, a property valuation, and to pay off as many debts as you can. Be sure to shop around and compare offers from different lenders to find the best deal for your needs. If you're looking for a good mortgage broker recommendation, contact the SM Property team. Make sure to visit our Instagram for more tips and tricks on home buying and new build properties.