Preparation for Pre-Approval: What's in Your Bank Statements?
If you are planning to get a mortgage pre-approval in the next three months, your bank statements are an important factor to consider.
In New Zealand, getting a mortgage pre-approval isn't just about earning enough money. Banks want to know: if we hand this person hundreds of thousands of dollars, can we trust them to pay it back? Your bank statements are how they answer that question.
The good news? It's nowhere near as strict as most people expect. Even with the occasional hiccup, you're unlikely to be ruled out entirely. Here's what actually matters.
Counting Coffees
No. This is one of the most common myths we hear, and it's worth putting to rest.
Banks aren't scrutinising how much you spend on coffee or at lunch. What they're looking for is the bigger picture: after your lifestyle spending is done, are you still in control of your money? Do you live within your means?
A few takeaways here and there won't ruin your application. What matters is the overall pattern.
The Things Banks Actually Care About
There are a few specific behaviors that do raise flags, and most people aren't aware of them until it's too late.
Unarranged overdrafts. Going into the negative, even by $5, tells a lender you're not tracking your balance. It's a small thing that carries an outsized signal. Set up a small buffer if you can. (Please note that this is different to an arranged overdraft)
Dishonored payments. If a direct debit for your phone bill, gym, or power bounces, banks notice. It suggests your account isn't being actively managed. Make sure your regular bills are covered before anything else.
Maxing out your credit card. If you have a $5,000 credit limit and you're regularly hitting it, that's a red flag. Lenders want to see that you're not relying on credit to get through the month.
If any of these have come up once or twice due to a genuine mistake, it's usually not a dealbreaker. Part of a mortgage adviser's job is helping you explain those situations to the bank in the right context.
Gambling
Banks prefer to see no gambling at all, and if you're buying with less than a 20% deposit, that preference becomes even stronger. Occasional transactions might be explainable, but they'll be factored in as a recurring expense, which reduces what you can borrow. The cleanest path is to avoid it entirely in the lead-up to your application. This includes online gambling and small transactions.
The Mortgage Practice
One of the best ways to prove you are ready for a home loan is to start a Mortgage Practice. This proves "genuine savings" and shows the bank that you can comfortably handle the jump from renting to owning. It also allows you to test your budget and see what mortgage level you'd actually be comfortable with.
How to do it: Calculate the difference between your current rent and your future mortgage repayments.
Example:
Current Rent: $400/week
Future Mortgage: $700/week
Boarder/Flatmate Income: -$200/week
Your "Gap": $100/week
In this scenario, you should be consistently saving at least $100 a week. By doing this, you are proving to the bank (and yourself!) that your lifestyle already fits the mortgage you’re asking for.
Start Today
Your history doesn't need to be spotless going back a year. But the last three months matter a lot. If you start tightening up these habits now, you won't be scrambling to explain your statements later which can cause delays in getting an approval.
If you're not sure where your statements currently stand, that's exactly what I'm here for. Get in touch and we can take a look together.
