The questions and original answers

Given that you and your partner have run your own business for three years and have owned a home before, I'd start with New Zealand's main banks and a mortgage adviser who specialises in self-employed borrowers.

Three years in business is a useful track record. If you have at least two years of completed financial statements, can demonstrate consistent income, and have a reasonable deposit, you may be in a good position to apply for a standard home loan.

The key challenge is that lenders assess self-employed income differently from salaried income. They want to establish how much you can sustainably earn from your business, not simply how much money passes through your business accounts.

1. Which lenders would I recommend?

I'd start with these five lenders, then consider specialist lenders if the major banks' assessment of your business income doesn't work in your favour.

Lender	Why I'd consider them	Official information
ANZ	A good starting point for a standard home loan application. ANZ accepts financial statements from self-employed applicants, preferably prepared by an accountant.	ANZ home loans
ASB	Worth approaching if you have well-documented business income and can demonstrate that the repayments will be affordable. ASB requests up-to-date accountant-prepared financial statements from self-employed applicants.	ASB home loans
BNZ	A strong option to investigate if you have two years of completed business accounts. BNZ specifically identifies the last two years of annual financial statements as evidence for self-employed borrowers.	BNZ home loans
Westpac	Another major bank worth comparing, particularly if your accounts clearly demonstrate your ability to service a mortgage. Westpac requests the latest accountant-prepared financial statements for self-employed applicants.	Westpac home loans
Kiwibank	Worth including in your comparison. Kiwibank offers access to home loan specialists who can guide you through conditional approval and the application process.	Kiwibank home loans

These lenders' published application requirements support starting with the major banks, although none guarantees approval based on your business history alone. Your deposit, income, expenses and existing debts will all matter. Sources: ANZ, ASB, BNZ, Westpac, Kiwibank.

What about specialist lenders?

If your business is profitable but the way you pay yourselves makes your income look low on paper, I'd also speak with a mortgage adviser who works with self-employed borrowers.

Two options worth knowing about are:

• Pepper Money — offers alternative-documentation home loans for eligible self-employed applicants. Its published information says applications may be considered with as little as six months of business bank statements. Rates and eligibility depend on the application.
• Luminate — a mortgage lending specialist that works with self-employed borrowers and can explore options across multiple lenders.

I'd investigate these options if the major banks cannot recognise enough of your income to approve the amount you need. Specialist lending can be more flexible, but it may also be more expensive.

My preference would be to secure a standard bank mortgage if possible, rather than paying a higher interest rate for a specialist loan unnecessarily.

2. How will lenders assess your business?

Because you've been in business for three years, the next question is how that business is performing financially.

Lenders will generally want to understand the following.

Your business income

They may look at your latest two years of financial statements and tax information to establish sustainable income.

For example, if your business makes $180,000 in annual profit but you and your partner draw only $100,000 between you, the lender will need to understand your business structure and how much income is genuinely available to support your mortgage.

The calculation depends on whether you operate as a sole trader, partnership or company. Don't assume that the business's entire profit will count as your personal income.

Your income history

A business that has grown steadily over three years may present a stronger application than one whose profits have declined significantly.

If your latest financial year was particularly good, ask a mortgage adviser whether the lender can take that year's performance into account rather than simply averaging both years.

Your deposit

Your deposit will affect which lenders and interest rates are available to you.

A deposit of 20% or more is a useful target for a standard owner-occupied home loan. Banks can make some loans with smaller deposits, but low-deposit lending is subject to restrictions and individual lending criteria. Reserve Bank of New Zealand: LVR restrictions.

Your existing financial commitments

Lenders will consider your personal expenses, business commitments, credit cards, personal loans and other debts when calculating how much you can borrow.

If you have retained profits in your business, be prepared to explain whether those funds are available to you or needed to keep the business operating.

3. Does having owned a home before make a difference?

Yes, potentially, but not necessarily in the way you might expect.

Since you've owned a home before, you generally won't qualify as a first-home buyer simply because you're purchasing another property.

However, you may have an advantage if you have equity from a previous property or a substantial deposit from its sale.

If you've sold your previous home, the money left after repaying the mortgage and paying selling costs could provide a substantial deposit for your next purchase.

If you still own your previous property, a lender may consider its equity and any rental income, but it will also take the existing mortgage and associated costs into account.

Your previous homeownership doesn't automatically improve your borrowing capacity. Your current finances are what matter most.

4. What I'd do in your position

I'd take these steps before committing to a particular lender.

1. Get your business financials in order. Have your accountant prepare your latest two years of financial statements and ensure your tax information is up to date.
2. Calculate your available deposit. Include savings, any proceeds from a previous property sale and other funds you can legitimately use.
3. Speak with a self-employed mortgage adviser. Ask them to assess your application across several banks rather than approaching just one lender.
4. Get conditional approval. This will give you an indication of your borrowing capacity before you commit to buying a property.

I'd also ask the adviser to explain how each lender calculates your income. Two lenders can assess the same business differently, which may affect the amount they are prepared to lend.

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5. Let me narrow this down to the best lenders for you

I can make a much more useful recommendation if I know a little more about your circumstances.

The most important question is: what type of business do you and your partner run?

For example, are you:

• A limited company, paying yourselves salaries or shareholder salaries?
• A partnership?
• Sole traders?
• Contractors or self-employed professionals?

This matters because lenders can treat business profits, shareholder salaries and self-employed income differently.

Once I know that, I can help narrow down which lenders I'd approach first and what you can do to put your application in the strongest possible position.