Disclaimer:
The information on this website is for general guidance only and does not constitute financial or investment advice. Always do your own research and seek personalised advice from a qualified financial adviser or mortgage adviser before making financial decisions. All investments carry risk and past performance is not indicative of future results.
Key Takeaways
- Reducing debt can improve affordability because lenders assess existing repayments and expenses.
- Existing debt repayments can reduce monthly surplus and affect lender affordability checks.
- A clear, realistic budget helps lenders see how you will manage repayments.
- Track expenses and test whether your proposed budget is realistic.
- Use calculators and qualified mortgage advice as guides, then confirm borrowing with a lender before relying on it.
The New Zealand housing market is constantly evolving, presenting both challenges and opportunities for first-home buyers. A practical starting point is to focus on the areas lenders and advisers commonly review before home loan pre-approval: debt, expenses, budget, deposit and property-specific finance conditions.
So here are our 3 tips to help you get closer to your goal of owning your first home:
1. Reduce or Get Rid of Your Debts
There are many hurdles when first-home buyers are getting ready for a mortgage. Existing debt can be one of them, because repayments form part of lender affordability checks. Reducing or restructuring debt may help, but the right approach depends on the borrower and the lender.
Key Point: Existing debt repayments, such as credit card, personal-loan or car-finance payments, are part of the expenses lenders consider in affordability and suitability checks. They can reduce monthly surplus and may affect how much a lender is willing to approve.
These expenses can lower your monthly surplus (income less expenses), which is one factor in home loan affordability.
Need personalised guidance?
Chat with a First Home Buyers Club affiliated mortgage adviser - no obligation!
Have a question about this?
Post it in the First Home Buyers Club forum — get answers from the community and industry professionals.
2. Create a Home Ownership Budget
Under the CCCFA responsible-lending framework, lenders must check whether credit is affordable and suitable. Consumer Protection says the Responsible Lending Code was updated from 31 July 2024 to give lenders more flexibility in how they assess affordability while maintaining responsible lending practices.
That means a home-ownership budget can help you understand your current spending, show which changes may be realistic, and prepare for lender questions. Whether a lender accepts future spending changes depends on its policy, evidence requirements and your overall application.
First-home buyers can improve their preparation by understanding expenses clearly, reducing avoidable pressure where possible, and getting lender or mortgage-adviser feedback before relying on a borrowing figure.
Our Suggestions:
- Create a home-ownership budget using the FHBC Budget tool, Sorted budget planner, your bank tools or another budgeting app
- Set up a system that is realistic for you, such as automatic payments or a monthly bank-statement review
- Review bank statements for expenses that may be reduced if they do not fit your goals, such as unused subscriptions, dining out or other discretionary spending
3. Confirm Your Home Loan Affordability
An important step before applying for a home loan is getting an estimate of current affordability. Settled.govt.nz says conditional pre-approval can indicate the price range you can buy in, but lenders usually still need property information before confirming the loan.
Ready to Check Your Affordability?
Get personalised feedback on your home loan affordability from our team of mortgage advisers. Understanding where you stand can help you plan next steps, but borrowing still depends on lender criteria, property information, insurance, and final approval.
Have a first-home-buyer question?
Browse related forum discussions
Public forum questions are searchable, with answer previews for visitors and full discussions for free members.
Frequently Asked Questions
Need personalised guidance?
Chat with a First Home Buyers Club affiliated mortgage adviser - no obligation!
Have a question about this?
Post it in the First Home Buyers Club forum — get answers from the community and industry professionals.
Related Articles
A First Home Buyer's Guide to Real Estate Terms and Sale Methods in New Zealand
Essential guide to understanding real estate terms, sale methods, and property jargon for first-home buyers in New Zealand. Learn about auctions, deadline sales, and more.
Buying a Monolithic or Plaster Home in New Zealand: What First Home Buyers Should Know
Essential guide for first-home buyers considering monolithic or plaster homes in New Zealand. Learn about weathertightness, inspections, insurance, and legal protections.
How to Secure a New Build with a 5% Deposit
Learn how first-home buyers can secure a new build in Auckland with just 5% deposit using the First Home Loan scheme and KiwiSaver.
How to Supercharge Your First Home Deposit in New Zealand
Learn proven strategies to accelerate your savings and reach your deposit goal faster with KiwiSaver and smart saving techniques.