For a routine mortgage application we need to supply potential lenders with the following:

A signed and completed Craig Pope Financial application (can be done online). This same form can be used to apply to different lenders.

Your last 3 bank statements for all your dayto-day accounts and debts. These must show your bank’s name, your name and running balances on the right-hand side. We have a handy online link to make this easier.

Proof of income – normally with your last 3 pay slips. If you are self-employed a copy of your last 2–3 years financials is required. In some instances IRD tax summaries may be useful for showing regular overtime and bonuses. Letters confirming Working for Families income or ACC income may also be required.

Proof of deposit – usually your last 3 bank statements of your savings account showing savings history and deposit amount. If you are using KiwiSaver then a
letter or email is required from your KiwiSaver provider showing that you are approved to withdraw funds and how much is available. Kainga Ora Grant approval letter.

A copy of photo ID – such as driver’s licence or passport. Plus, from time to time, any other relevant information such as proof of residency, job contracts, proof of boarders, Gift declaration, KiwiSaver statement and proof that any agreed HPs, loans or credit cards have been paid off.

In due course, when you have found a home, we will need to provide the lender a copy of the signed and dated sale and purchase agreement.

Here are some terms and tips for helping you understand the process

If you are borrowing over 80% of the home’s value, meaning you have less than 20% deposit, the servicing calculation will be tougher than if you had 20% or more deposit.

Loan to Value Ratio (LVR) – This is a critical element for determining what and if you can borrow money for your first home. Most lenders will lend up to 90–95% of a home’s value, subject to Reserve Bank LVR restrictions and other criteria.

However, there are LVR restrictions for different types of properties such as apartments, terraced houses, sections, leaseholds, company shares etc.

Depending on how much debt you have, the deposit you have and the dependents you have, your approximate borrowing power is 3.5 to 6 times your gross annual income (subject to Bank test rates at the time). Lenders prefer your loan and debt payments to be less than a third of your gross income. Try to avoid using
lenders’ online borrowing power calculators, as they are quite often inaccurate.