Buying your own home is a big milestone and most likely the biggest financial commitment you will ever make. You put time into researching the market, house viewings, gathering supporting documents, and calculating budgets. It’s a journey that involves hope, anticipation, and a fair bit of paperwork! Unfortunately, many Kiwis face the disappointment of having their home loan application rejected or declined.
If you’re worried about potential roadblocks ahead, don’t go alone. Reach out, we’re committed to helping more Kiwis unlock the door to their own homes. Reach out to us today and let’s work together to find the right lending solution for you.
Common Reasons for Home Loan Rejection
Not Having the Right Deposit
New Zealand lenders all have their own specific requirements when it comes to how much money you need to put down upfront. These requirements can vary depending on:
- Whether you’ll live in the property or rent it out as an investment
- If you’re looking for an interest-only mortgage or planning to pay off the principal too
- The type of property you’re hoping to buy, especially with apartments under 50m²
Some banks might accept a 5% deposit for a first-home buyer, while others won’t even look at your application unless you’ve saved 20%. Since the CCCFA changes and LVR restrictions came into effect, deposit requirements have become even stricter.
As mortgage brokers, we work with multiple lenders across New Zealand and know exactly which ones might be more flexible with your deposit situation. Getting personalised advice before applying can save you from wasting time with the wrong lenders and locking yourself from getting into your first home.
Falling Short on Income Requirements
Just like with deposits, every lender calculates affordability differently. It’s quite common to find that:
- Lender A might happily offer you a NZ$660,000 mortgage
- Lender B will only go up to NZ$610,000
- Lender C might stretch to NZ$690,000
These differences come down to how each lender assesses your income and applies their lending criteria. Submitting multiple applications to different lenders without understanding these differences first can actually harm your credit score, making future applications even harder.
A good mortgage broker in Auckland knows exactly how each lender calculates affordability and can direct your application to where it’s most likely to succeed. Submitting multiple applications to different banks without understanding these differences first can actually harm your credit.
Living Paycheque to Paycheque
Under New Zealand’s Credit Contracts and Consumer Finance Act (CCCFA), lenders need solid evidence that you can comfortably afford your mortgage payments. If your bank statements show you’re spending everything you earn each month with little left over, or you’re frequently dipping into your bank overdraft, lenders will be concerned.
What Kiwi banks are looking for is proof of good financial habits, such as:
- Regular savings contributions to your KiwiSaver or savings account
- Rent payments made consistently and on time
- Power, internet and other bills paid promptly
- Some money left over at the end of each month after expenses
- Limited use of buy-now-pay-later services like Afterpay or Laybuy
A mortgage broker can advise you on establishing these patterns for at least three to six months before applying, which can significantly boost your chances of approval with major banks and even second-tier lenders.
A Credit History
Although not the most important, a credit score has some impact on your home loan application.
Missed mobile phone payment, a utility bill that slipped through the cracks or perhaps you’ve had a late credit card payment or two in the last 6 to 24 months may affect your lending amount.
These might seem like small matters to you, but Kiwi lenders see them as red flags as it appears that you might not be reliable with repayments on time. You can check your own credit score for free through Credit Simple, but this doesn’t show the full picture as the lender themselves see it.
We will give you the best mortgage advice and explain exactly what’s affecting your chances of approval. Many clients are surprised to learn about issues on their record they weren’t even aware of.
Missing Paperwork
New Zealand lenders need to verify everything about your financial situation, which means providing documentation for:
- Your income (recent payslips, IRD income summaries, tax returns)
- Existing debts (car loans, credit cards, student loans from StudyLink)
- Spending habits (bank statements showing your typical expenses)
- Savings history (KiwiSaver statements, term deposit certificates)
- ID verification (passport or driver’s licence plus proof of address)
If you’re missing any of these crucial documents, your application might be rejected simply because ASB, Kiwibank, or whoever you’re applying with couldn’t properly assess your situation. This is especially true since the CCCFA changes made banks much more thorough in their assessment process.
As mortgage brokers, we take care of all of it. We prepare all necessary documentation before approaching any lenders, significantly improving your chances of approval and making the process much smoother.
Inaccurate Information
Even small mistakes on your application form can lead to rejection:
- Understating your living expenses (lenders can check your bank statements!)
- Entering incorrect details about your credit cards or other loans
- Mistakes in your employment history or current income
These errors might be completely innocent, but they can raise suspicions with lenders or create inconsistencies that cause your application to be declined and that’s why it’s best to go with a mortgage broker.
Get Expert Help for Your Next Application
Navigating today’s complex lending environment can be incredibly challenging, even for the most organised applicants. With banks tightening their criteria and the housing market continuing to evolve across Auckland, Wellington, Christchurch and beyond, expert guidance has never been more valuable. The good news is you don’t have to tackle it alone.
At Oliver Broomfield Mortgage & Insurance Advisers, we specialise in making the home loan process straightforward and stress-free for Kiwis. Our team will:
- Identify the most suitable lenders from across New Zealand’s banking sector for your specific situation
- Ensure your application is properly prepared before submission
- Handle all the paperwork and communications with lenders
- Guide you through every step of the process, from pre-approval to settlement
- Help you access first home buyer assistance like KiwiSaver withdrawals and First Home Grants if you’re eligible
Have you recently faced a home loan rejection from your bank? Don’t lose hope. As experienced mortgage brokers with connections to all major banks and non-bank lenders in New Zealand, we often help clients secure approvals after previous rejections.
Contact us today, and let’s work together to turn that “no” into a “yes” on your next application. We’ll do all the legwork while you focus on finding your dream home in Aotearoa.
