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Lenders look at four key areas when making an assessment - Character, Capacity, Capital, and Collateral. Collectively these help the lender determine the overall 'risk factor' in providing you with a mortgage. Understanding these key areas and ensuring that you present each in the best light possible, should have a positive effect on your application.


This is essentially determined by reviewing your credit report and bank statements, while defaults, collections and gambling transactions normally have a serious impact. Having a large number of credit enquiries could suggest that you have an appetite for debt and can have a detrimental effect on your application.


Each bank has their own way of calculating your ability to meet all of your current and proposed obligations, however, all assessments factor in some allowance for a potential increase in your expenses. (i.e. an increase in interest rates). Again, a larger number of short-term debt could suggest an appetite for debt and increase the risk.


This is what you are putting into the purchase (the deposit) and how you came to have it. (i.e. Genuine Savings, KiwiSaver, Gift or Loan). When purchasing a home, it is likely that your current rent will be less than the proposed mortgage and other related expenses, so being able to prove an ability to save funds will help reduce the risk factor.


Lenders evaluate the value and condition of the property to ensure that it will be appropriate for security purposes. Buildings that are made of certain materials [like plaster or monolithic cladding] or are of a certain age could require additional documentation to confirm their condition (i.e. a builder’s report).

Meeting the Conditions

Often banks will look to provide you with an approval subject to you meeting some additional conditions. These need to be met before (i.e. further documents to support your application) or after settlement (i.e. reduction of debt or improvements to the property).

Confirming the Account Structure

Once all conditions have been met and prior to documents being sent to your Solicitor, you will need to determine how you want your loan to be structured.

A good structure should allow you to:

repay the loan faster than required
reduce the impact of a potential interest rate increase
be appropriate to your current and forecasted circumstances
And by using an assortment of mortgage products and fixed terms.

Completing Settlement

Following confirmation of your account structure, documents will be ordered and forwarded (normally electronically) to your Solicitor for you to sign. By this point, you should have had a number of conversations with the Solicitor and be able to complete this step relatively quickly.

For the most part, mortgage providers offer the same products and services. But, there are some small differences in how they assess your application or in the features of the Mortgage or Loan Account. These minor variances could have an impact on your ability to do things in the future. This is one of many reasons why we would recommend that you seek assistance from a Mortgage Advisor.

About the author

Tracey Munns is the Co-founder and CEO of VerdiPlus and a specialist in personal wealth creation. She is an engaging energetic business person widely experienced in aspects of the financial services industry. Tracey holds a Bachelor of Commerce, is a Registered Financial Adviser and a noted businesswoman and public speaker. Her passion is to help as many people as she can to 'love their finances and change their lives'