Home loan checklist for business owners in New Zealand

If you and your partner have been running your business for three years, you're in a reasonable position to apply for a home loan. Many New Zealand lenders prefer to see two or more years of self-employed income history, so having three years of trading history can work in your favour.

The key difference between applying as a business owner and applying as a salaried employee is that the lender needs to establish two things:

1. Your business can generate reliable income to support your mortgage repayments.
2. You and your partner can afford the repayments personally, after accounting for your living costs, existing debts and other financial commitments.

The lender will generally assess your business finances, your personal finances and the deposit you have available.

Requirements vary between banks and depend on your business structure, how you pay yourselves, the size of the loan and the strength of your financial position.

Here's what I'd prepare.

1. What the lender will need from your business

Because you've been operating for three years, I'd start by gathering the last two to three years of financial records.

A. Annual financial statements

This is likely to be the most important part of your application.

Ask your accountant to prepare or provide the following for your business:

• Profit and loss statements for the last two or three financial years, showing revenue, expenses and net profit.
• Balance sheets showing business assets, liabilities and equity.
• Financial statements for the most recent completed financial year.
• Current-year management accounts, such as an up-to-date profit and loss statement, if the latest annual accounts are no longer representative of the business.
• Notes to the financial statements, where applicable, explaining significant expenses, liabilities or changes in performance.

Banks such as BNZ and ASB specifically identify business financial statements as evidence of self-employed income. BNZ asks self-employed applicants for their last two annual financial statements. Exact requirements vary by lender. Sources: BNZ and ASB.

The lender will generally want to understand:

• How much revenue the business generates.
• Whether profits have been consistent or increasing.
• Whether the business is financially stable.
• Whether the business has significant debt or other financial commitments.
• Whether the income you receive from the business is likely to continue.

A useful tip: Ask your accountant for the full financial statements, rather than just a one-page profit summary. The additional detail may help the lender understand your actual financial position.

B. Business and personal tax records

Depending on your business structure, prepare:

• Business income tax returns for the last two financial years.
• Your personal income tax returns for the last two financial years.
• IRD income summaries or tax assessment information, if requested.
• Confirmation of your current tax position, particularly if there are outstanding tax liabilities.

The relevant documents depend on whether you operate as a sole trader, partnership or limited company.

For example, a company might provide its company tax returns alongside the shareholders' personal tax returns. A sole trader's business income is generally reported through their personal tax return.

Your lender may ask for additional information to reconcile the income reported in the accounts with the income declared to Inland Revenue. Source: SBS Bank.

C. Business bank statements

Have your business bank statements ready, particularly for the most recent three to six months.

These help demonstrate:

• Regular customer payments and business income.
• Whether revenue is consistent with your financial statements.
• The business's cash flow.
• Business loan repayments and other financial commitments.
• Whether the business has sufficient working capital.

Your lender may request a shorter or longer period depending on the application.

If your business uses several bank accounts, credit facilities or payment platforms, be prepared to explain how they fit together.

D. GST returns and other supporting records

If your business is GST-registered, it's sensible to have recent GST returns available.

You may also be asked for:

• Details of business loans, overdrafts and credit facilities.
• Hire purchase or vehicle finance agreements.
• Outstanding tax obligations or payment arrangements with IRD.
• Details of significant contracts or recurring customers.
• Information about major changes in revenue or operating expenses.

Not every lender will require all these documents upfront. Having them ready can help prevent delays if the bank requests further evidence.

E. A letter from your accountant

I would ask your accountant whether they can prepare a letter specifically for your mortgage application.

It can be useful for the letter to confirm:

• How long the business has been operating.
• The business's ownership structure.
• Your role in the business.
• Your income from the business.
• Whether the accounts are finalised and up to date.
• Any significant changes in profitability.
• Whether the business is continuing to trade normally.

The lender may have its own accountant's declaration or questionnaire.

This is particularly helpful if your financial statements don't tell the full story, such as when you've recently increased your income or the business has experienced a particularly strong trading year.

---

2. What the lender will need from you and your partner personally

Even though you operate a business together, the bank will assess the financial position of each person applying for the mortgage.

A. Proof of your personal income

The lender needs to establish how much income each of you receives and how reliable that income is.

The documentation will depend on how your business is structured.

How you receive income	What the lender may need
Salaries or wages from your company	Payslips, employment income records and evidence of salary payments
Shareholder salaries	Company financial statements, tax records and details of shareholder salaries
Dividends	Dividend records and evidence of payments
Sole-trader or partnership profits	Business financial statements and personal tax returns
Other income	Supporting evidence for rental income, investments or other regular income

You don't necessarily need to receive a regular PAYE salary to qualify for a mortgage.

However, the bank will need to understand how much income is genuinely available to support your mortgage repayments.

An important distinction: Your business's turnover is not your personal income. If your company generates $500,000 in annual revenue, for example, the bank won't treat that entire amount as income available to you.

It will consider your business expenses, liabilities, profitability and the income it considers available to you as an owner.

B. Personal bank statements

Prepare bank statements for both of you, generally covering the most recent three months. Some lenders or applications may require longer periods.

These statements help the lender understand:

• Your regular household spending.
• How much you save each month.
• Your personal loan repayments.
• Credit card spending and repayments.
• Any unusual or substantial transactions.
• Whether your spending is consistent with the budget you've provided.

If you use multiple personal accounts, the lender may ask for statements from each relevant account.

You should also be prepared to provide statements for accounts held with other banks, not just the bank you're applying to.

For example, BNZ requests three consecutive months of transactional statements to assess regular living expenses. Source: BNZ.

C. A breakdown of your household expenses

The bank will assess how much money you need to live on after making your mortgage repayments.

It's worth preparing a realistic monthly household budget covering:

• Groceries and household supplies.
• Electricity, internet and mobile phones.
• Fuel, transport and vehicle maintenance.
• Car insurance and other insurance.
• Rates and property-related expenses, if applicable.
• Childcare, school fees or other family costs.
• Subscriptions, entertainment and dining out.
• Medical and other regular expenses.
• Existing rent or mortgage payments.

Don't underestimate your spending to make the application look stronger. Lenders may compare your budget with your bank statements and ask you to explain significant differences.

They'll want to understand what your household can realistically afford, not simply what you think you could spend if you cut everything back.

D. Details of your personal debts and financial commitments

You'll need to disclose your existing financial commitments, including those held individually or jointly.

These may include:

• Personal loans.
• Car finance and hire purchase.
• Credit cards and their limits.
• Buy now, pay later accounts.
• Student loans.
• Existing mortgages.
• Overdrafts and guarantees.
• Child support or other ongoing commitments.

The bank will consider how these affect your ability to service a new mortgage.

For credit cards, the available credit limit can matter as well as the outstanding balance. A card you rarely use may still affect your borrowing capacity.

If you have unused credit facilities, ask your mortgage adviser whether reducing or cancelling them would help. Don't close facilities without considering whether you need them or whether doing so is appropriate for your circumstances.

E. Identification and personal details

For both applicants, prepare:

• A valid passport or driver's licence, as accepted by the lender.
• Proof of your residential address, if requested.
• Details of your current employment and business involvement.
• Relationship and household information relevant to the application.
• Details of any dependants.

The bank will tell you which identity documents it accepts and whether it needs additional verification.

---

3. What you'll need to prove about your deposit

Your deposit is another important part of the application.

You'll need to demonstrate both how much money you have available and, where requested, where it came from.

Depending on your circumstances, acceptable evidence may include:

• Personal savings account statements.
• Evidence of term deposits or investments.
• KiwiSaver balance and withdrawal information, if eligible.
• Evidence of funds gifted by family, along with any required gift declaration.
• Evidence of proceeds from selling another property or asset.

If your deposit has accumulated through drawings, salaries or dividends from your business, keep records showing how the money moved from the business to your personal accounts.

Be careful about withdrawing a large sum from your business just before applying. You need to consider whether the withdrawal would leave the business with sufficient working capital and whether the lender will regard the funds as genuinely available for your home purchase.

If you intend to use business funds directly towards the purchase, discuss this with your accountant and mortgage adviser before moving the money.

You can find more information about deposit evidence in BNZ's home loan preparation guide.

---

4. How the bank will calculate your borrowing capacity

This is particularly important for business owners because the income shown in your accounts isn't always the same as the income the bank will use.

Example: A business with two owners

Imagine your business has the following annual figures:

Item	Annual amount
Business revenue	$600,000
Business operating expenses	$450,000
Accounting profit before tax	$150,000

Although the business generates $600,000 in revenue, its accounting profit is $150,000.

The lender will then investigate how that profit translates into income available to support your household.

It may consider:

• The salary each of you receives.
• Whether profits are retained in the company.
• Whether profits are distributed as dividends.
• Whether the business needs to retain funds to operate.
• Business debts and tax obligations.
• Whether the business's earnings are stable and sustainable.

The figures above are illustrative only. The lender's actual calculation will depend on your accounts, business structure and lending policy.

What if your accountant has minimised your taxable profit?

This is worth discussing with your accountant before you apply.

Business owners often claim legitimate business expenses and depreciation deductions that reduce taxable profit. Some expenses may be treated differently when a lender calculates income available for mortgage repayments.

For example, a lender may consider adding back certain non-cash expenses, such as depreciation, when assessing your income. However, it won't necessarily accept every expense or deduction as an add-back.

Likewise, if you leave profits in the company to fund future growth, the bank may not automatically treat all retained profits as personal income.

Ask your accountant to identify any items that could warrant explanation and prepare the supporting calculations.

Don't change legitimate tax deductions just to increase your apparent income. Instead, make sure your lender has the complete accounts and understands your business's financial position.

What if your profits have increased over the last three years?

That can be encouraging.

A business with steadily increasing revenue and profits may present a stronger picture than one with declining or inconsistent earnings.

However, if your latest financial year was unusually profitable, the bank may want evidence that the result is sustainable.

If profits have fallen, that doesn't automatically mean your application will fail. The lender will want to understand why and whether the decline is temporary or likely to continue.

---

5. Does your business structure make a difference?

Yes. The documents required and the way your income is assessed can differ depending on your business structure.

Business structure	What the lender will generally examine
Sole trader	Your business profit, personal tax returns and personal financial commitments
Partnership	Partnership accounts, your share of profits, tax information and any partnership liabilities
Limited company	Company financial statements, ownership details, salaries, dividends and company liabilities
Company with retained profits	Whether and how much of the company's profit can reasonably be counted towards your personal borrowing capacity

If you and your partner own a limited company, the bank may examine the company's overall financial position, not just the salaries you draw.

Depending on the ownership structure and lending arrangement, it may also ask for company information or require additional declarations from directors or shareholders.

This is one reason a mortgage adviser experienced in self-employed lending can be useful.

---

6. What could delay your application?

With three years of trading history, I'd pay particular attention to these potential issues before submitting your application.

Financial statements aren't finalised

If your accountant hasn't completed the latest financial year, ask when the accounts will be available and whether the lender will accept interim financial information.

The business has significant tax debt

Outstanding IRD liabilities can affect the lender's view of both the business and your household's financial position.

If you have an arrangement with IRD, prepare the supporting documentation and make sure the lender understands the repayment obligations.

Personal and business expenses are mixed together

If you regularly pay personal expenses from the business account, or business expenses from personal accounts, explain this to your accountant and mortgage adviser.

It may take additional work to establish the business's actual profitability and your household's living costs.

Your income fluctuates significantly

If you work in a seasonal industry or rely on a small number of major customers, the lender may want to see more evidence of sustainable earnings.

You have large debts or unused credit limits

These may reduce the amount you can borrow, even if your business is profitable.

Your deposit is difficult to trace

If a large deposit has recently appeared in your account, have documentation available to explain its source.

Being able to explain these issues upfront can make the application process more straightforward.

---

7. Your practical document checklist

If I were preparing your application, I'd organise the paperwork into three folders.

Folder 1: Business documents

• Last two to three years of annual financial statements.
• Profit and loss statements and balance sheets.
• Business tax returns and relevant IRD records.
• Current-year management accounts, if available.
• Three to six months of business bank statements, or the period requested by the lender.
• Recent GST returns, if applicable.
• Details of business loans, overdrafts and other liabilities.
• Accountant's letter or lender-specific declaration, if required.
• Company ownership details, if applicable.

Folder 2: Personal documents for both applicants

• Identification and proof of address, if required.
• Personal tax returns and income records.
• Evidence of salaries, shareholder salaries or dividends, as applicable.
• Three months of personal bank statements, or the period requested by the lender.
• Details of personal loans, credit cards and other debts.
• A realistic monthly household budget.
• Evidence of other income, if applicable.
• Details of dependants and other ongoing financial commitments.

Folder 3: Deposit and property documents

• Evidence of available savings.
• KiwiSaver balance or withdrawal information, if applicable.
• Evidence of gifted funds, if applicable.
• Records showing the source of substantial deposits.
• Details of any property you're considering buying.
• Sale and purchase agreement and other property documents, once applicable.

This checklist covers the common requirements, not every possible document. Your lender may request additional information.

---

8. My recommendation for your situation

Because you've been in business for three years, I'd take these three steps before formally applying.

First, speak to your accountant. Ask for your last two or three years of financial statements and personal tax information, and have them explain the income figures a lender is likely to examine.

Second, speak to a mortgage adviser or your preferred bank. Give them an overview of your business structure, annual profits, personal incomes and deposit. Ask which lenders are best suited to your circumstances and obtain their specific document checklist before submitting everything.

Third, get a borrowing-capacity assessment before committing to a property. Your business turnover alone won't tell you how much you can borrow. The lender needs to establish sustainable income, account for your commitments and assess your deposit.

For official starting points, see:

• ANZ — Getting pre-approval
• BNZ — Preparing for a home loan appointment
• ASB — Home loan application checklist

One question that would help me tailor this to you

What type of business do you and your partner operate?

For example, is it a limited company where you both draw salaries, a company where you take shareholder salaries or dividends, a partnership, or a sole-trader business?

That distinction makes a real difference to which documents you'll need and how a New Zealand lender is likely to assess your income.