Disclaimer:
The information on this website is for general guidance only and does not constitute financial or investment advice. Always do your own research and seek personalised advice from a qualified financial adviser or mortgage adviser before making financial decisions. All investments carry risk and past performance is not indicative of future results.
Key Takeaways
- Clean bank statements improve pre-approval outcomes.
- Avoid unarranged overdrafts and dishonoured payments.
- Arrange a small overdraft if you need a buffer.
- Plan automatic payments around payday.
- Maintain good conduct for at least three months.
What is Good Bank Account Conduct?
One of our Tips For Getting A Yes To Pre-Approval is to show consistently good bank account conduct. Keeping your bank account in good order is often not considered by first home buyers when preparing to get a pre-approval.
First home buyers often wonder 'Why does this matter to me?' or 'What does this mean when getting pre-approval?' Well, the answer is that Banks need to make sure you can afford the loan you are borrowing (under the Responsible Lending Code).
Important: As a part of your home loan application, a lender will request your past 3 months of bank statements. If your statements show you regularly overdraw your account, this suggests to the bank that you may not be living within your means or that you are not managing your finances well. These signs impact on your chances of getting your Home Loan approved.
What To Watch Out For
- Your bank account slipping into overdraft
- Dishonoured automatic payments
Understand The Difference Between Arranged And Unarranged Overdraft
Need personalised guidance?
Chat with a First Home Buyers Club affiliated mortgage adviser - no obligation!
One key thing for first home buyers to understand when it comes to good bank conduct is the difference between an arranged overdraft and an unarranged overdraft. If you think that your bank allows you to go over your limit and that it is totally fine you could be wrong.
Warning: Allowing your account to go overdrawn without having an arranged overdraft facility with your bank creates a black mark on your account record. It also means incurring additional bank fees for doing so. An arranged overdraft facility can avoid any hick-ups impacting on your ability to get pre-approved, providing you stay within the arranged limit.
How To Remedy A Bad Banking Track Record
Luckily even if you do find your bank account conduct to be less than perfect there are ways to fix it:
- Plan Your Automatic Payments: Lining up your automatic payments to go out as soon as possible after payday will ensure your priority payments go out before any discretionary spending.
- Maintain A Float: Try to make sure that you have a buffer amount in your account to ensure you do not go overdrawn at all.
- Arrange A Small Overdraft: An arranged overdraft is going to help you avoid those situations where you find yourself a bit short.
- Keep a Good Record: Ensuring good Bank conduct for a period of at least 3 months will provide evidence to a lender of your credibility and reliability.
Frequently Asked Questions
Unlock the Budget Planner
Join free to access all our first home buyer tools and calculators.
Create Free AccountAlready have an account? Sign in
Related Articles
A First Home Buyer's Guide to Real Estate Terms and Sale Methods in New Zealand
Essential guide to understanding real estate terms, sale methods, and property jargon for first-home buyers in New Zealand. Learn about auctions, deadline sales, and more.
Buying a Monolithic or Plaster Home in New Zealand: What First Home Buyers Should Know
Essential guide for first-home buyers considering monolithic or plaster homes in New Zealand. Learn about weathertightness, inspections, insurance, and legal protections.
How to Secure a New Build with a 5% Deposit
Learn how first-home buyers can secure a new build in Auckland with just 5% deposit using the First Home Loan scheme and KiwiSaver.
How to Supercharge Your First Home Deposit in New Zealand
Learn proven strategies to accelerate your savings and reach your deposit goal faster with KiwiSaver and smart saving techniques.
