What do we need to provide for a mortgage application?

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

• A completed mortgage application (usually done in our online form). This same form can be used to apply to different lenders. There would also be an Authority form and Scope of Service form to read and sign.

• Your last 3 months most recent bank statements for all your day to-day accounts and savings. If refinancing an existing mortgage, then your last 3 months most recent mortgage statements are required. These must show your bank’s name, your name and running balances on the right-hand side and cannot be a CSV or excl format.

• Your last 3 months most recent statements for any debts, credit cards, personal loans etc.

• Proof of income – normally your last 3 most recent consecutive pay slips are provided. In some instances, IRD tax summaries may be useful for showing regular overtime and bonuses. Lenders check the payslips for base income, variations, deductions, employer name and match them up with bank credits. If you don’t get payslips, your employer can provide them on request.

• If you are self-employed, a copy of your last 2–3 years signed business financials are required including personal IR3 tax summaries.

• Proof of deposit – usually your last 3 months savings bank statements showing savings history. If you are using KiwiSaver then a letter or email is required from your KiwiSaver provider showing that you are eligible to withdraw funds and how much is available. If you are getting the Kainga Ora Grant, then a letter confirming it is required. If getting gifted money, then a gift certificate is required (template available).

• A copy of valid 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, 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.

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

The Loan to Value Ratio (LVR) – is a critical element for determining how much 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 rental properties, new builds, apartments, terraced houses, sections, leaseholds, company shares etc.

But it always pays to get advice from your Mortgage Adviser as each bank will assess you in a slightly different way which could make or break an approval.