Self-employed and want a mortgage in NZ? Here is how to get lender-ready

Shane Passfield-Bagley
Dec 1
7 min read

You love the freedom of working for yourself. The downside is that when you go to borrow, the bank does not look at you the same way as someone with a salary and a couple of payslips.

If you are self-employed, a contractor, freelancer or running a side hustle, you do not have to accept “it is too hard” as the answer. With the right prep, you can absolutely get into your next home or investment property.

This guide walks you through how banks see you, what they really look at, and the practical steps to get mortgage-ready as a self-employed Kiwi.

How banks really see self-employed income

For PAYE borrowers, the process is simple: show an employment contract and a few payslips. The bank can see gross income, tax is predictable, and costs of earning that income sit with the employer.

For self-employed borrowers, the picture is more complex. Lenders focus on:

Tax-paid income, not turnover
Consistency over time, not just one great year
How resilient the business is to ups and downs

Most mainstream banks assess self-employed income from your financial statements and tax returns, using net profit or “tax paid income” rather than total sales. They will usually average this over the last 1 to 2 years so they can see trends rather than a single snapshot.

On top of that, banks often categorise you based on your business turnover, which can affect who looks at your application and how flexible they can be with policy. Smaller businesses tend to be treated as higher risk and face more rigid processes, while larger or more established businesses may deal with specialist business banking teams who better understand things like seasonal cashflow and one-off expenses.

The takeaway: banks are not anti self-employed. They just need more proof.

Step 1 - Get your financials in order

The single biggest lever you have is the quality of your financial information.

Use proper accounting softwareTools like Xero, MYOB or Hnry make it easy to generate the reports lenders ask for - profit and loss, balance sheet and sometimes cashflow reports. Without this, your accountant must build everything from scratch, which costs time and money and can delay your application.

Know what banks normally want

In most cases, be ready to provide:

Last 2 years of accountant-prepared financial statements (P&L, balance sheet, and notes)
IRD tax summaries or IR3 returns for the same period
GST returns if you are GST-registered
3 months of business and personal bank statements
Loan and credit card statements for personal and business debt
A simple summary of what your business does, how long you have operated, and key clients or contracts

If you are newly self-employed

If you have been in business less than 2 years, you are not automatically ruled out. You may need to lean more on:

Up-to-date management accounts
Cashflow forecasts prepared by your accountant
Signed contracts or agreements with key customers
Evidence of doing similar work previously as a PAYE employee

In some cases, it can make sense to borrow while you are still employed, then shift to self-employment once the lending is in place. However, this poses a very real risk to your ability to afford the lending, and care must be taken in the decision-making process.

Step 2 - Be strategic about profit and tax

One of the biggest traps for business owners is this tension:

Your accountant wants to minimise tax.
Your bank wants to see profit.

Banks usually assess your servicing capacity based on your net profit after expenses, because that is the income you have told IRD you actually earned.

If you run every possible expense through the business - vehicle, phone, home office, even some personal costs - you might save tax, but your taxable profit can end up very low on paper. That can dramatically reduce how much the bank is willing to lend, even if you know you are comfortable in real life.

Before year-end, talk with your accountant about your plans. If buying a home or investment is on the horizon, it may be worth sacrificing some tax savings in one or two financial years to show stronger profit for lending purposes.

Also be aware of where you pay tax. If you are self-employed but earning from overseas clients, some banks are much more cautious when tax is not clearly paid in NZ. They may require a bigger deposit or decline the application entirely.

Step 3 - Strengthen your overall position

Lenders are not just looking at your business. They look at your whole financial picture.

Credit behaviour

A clean credit report, bills paid on time and no recent defaults or collections make a big difference. If you have any historical account or tax management issues, be sure to let your adviser know. They can run a credit check for you, and ensure that the issues are addressed in your application BEFORE the bank finds them.

Personal and business debt

Personal loans, HPs, Buy Now Pay Later, high credit card limits and tax arrears all chew through the income banks count towards mortgage repayments, although it is worth meeting with an adviser before using capital (cash) to repay these as it may be better utilised elsewhere. Paying these down or closing unused facilities can significantly increase your borrowing power. It is also important to understand that you will need to disclose and provide documentation for any business debts, along with your personal debts.

Deposit and savings pattern

Deposit size still matters. As a rough guide:

First home buyers may be able to borrow with deposits as low as 5-10% in some cases.
Next home buyers usually need at least 10%, but preferably 20%.
Investors usually need around 30% deposit under current rules, unless the property is classed as exempt.

Your deposit could come from your own savings, a gifted contribution, KiwiSaver (for first-home buyers), or equity in a property you already own.

Step 4 - Pick the right lender and structure

Not all lenders treat self-employed borrowers the same way.

Main banks

Sharper interest rates and more familiar brands
Prefer 2 full years of strong financials (in most cases) and consistent profit trends
Can be conservative about new businesses, offshore income and complex structures

Non-bank and specialist lenders

Non-bank lenders and specialist “near prime” lenders are often much more flexible with:

Newer businesses with only 1 year of financials
Significant year-to-year income swings
Borrowers coming back from past credit issues
More complex company or trust structures
Professionals transitioning in to the self-employed space

Their interest rates are usually higher than the main banks, often by 1.5-3%, so they are not a set-and-forget solution. But used well, they can be a stepping stone:

Use a specialist lender to secure the property.
Spend 1 to 2 years building up clean financials and stable profit.
Refinance back to a main bank at sharper rates.

A good adviser will help you decide whether going main bank first, or using a non-bank as a bridge, is the smarter move for your situation.

Which documents to line up

The more prepared you are, the smoother the process. A solid self-employed application typically includes:

Business financials

Last 2 years of financial statements, prepared by an accountant
A year-to-date Profit and Loss repost, or draft accounts if the latest year has just finished
Notes explaining large one-off expenses, big swings in profit or major changes in the business

Tax information

IR3 personal tax returns for the last 2 years
Partnership or company returns if applicable
Proof of current tax position, including any payment plans
GST returns if requested

Banking

6 months of business bank statements
3 months of personal statements
Statements for all loans and credit cards

Business overview

One-page business summary - what you do, who you serve, how long you have traded
List of key contracts, recurring revenue or long-term clients
Explanation of any profit movement greater than 20 percent year on year

Personal information

ID and proof of address
Summary of personal assets and liabilities
KiwiSaver and other deposit evidence

Having all of this ready before you start saves weeks of back-and-forth and positions you as organised and low risk.

Common situations and how to approach them

a) You are PAYE now but thinking of going self-employed

If you know you will want to buy in the foreseeable future, it is often easier to secure lending while still PAYE. Once you have the lending in place and you are settled, then move into self-employment with a clear runway and understanding of your ongoing costs.

If you have already resigned, get advice straight away. You may still have options, but timing and structure matter a lot more.

b) You have been self-employed for less than 2 years

Expect more questions and more paperwork, but do not write yourself off. Consider:

Getting your accountant to prepare a proper set of interim financials and a realistic cashflow forecast.
Using contracts and long-term agreements as extra evidence of stability.
Being open to specialist or non-bank lenders as a stepping stone.
Having a bigger deposit to offset the shorter trading history.

c) You have 2 or more years’ financials

This is where careful planning pays off.

Check how your profit looks averaged over 2 years.
Identify any odd years that need explanation (Covid impacts, one-off investments, big write-offs).
Tidy personal and business debt and reduce limits you do not truly need.
Make sure your current year numbers are tracking at least as well as last year before applying.

8. Why working with a self-employed specialist helps

If you are self-employed, your mortgage application is less about ticking boxes and more about telling a clear, credible story.

A good adviser will:

Help you choose the right lender for your industry and business profile
Translate your financials into the language bank assessors understand
Work alongside your accountant so tax planning and lending strategy are aligned
Spot issues early and help you fix them before an application goes in
Map out a 6 to 24 month plan if you are not quite ready yet, so you know exactly what to work on

You do not have to become a banking expert on top of running your business. Hand that part over and focus on keeping your business humming.

Final thoughts

Getting a mortgage when you are self-employed in New Zealand can feel like more work than it does for salaried friends. That is true. There are more moving parts, more documents and more questions.

But, if you:

Keep clean, up-to-date financials,
Plan your profit and tax position around your goals,
Protect your credit record and manage debt sensibly,
Build a strong deposit and savings history,
Choose the right lender with the right structure,

then being self-employed should be a strength, not a barrier. Your business is already proof that you can manage risk, handle uncertainty and create income from scratch. The right preparation simply helps the bank see that too.

(This article is general information only and is not personalised financial advice. For recommendations tailored to you, please talk with a licensed financial adviser.)