If you’re thinking about buying a home or investing in property down under, a bank loan is probably the first thing you’ll hear about. But NZ loans can feel confusing – different terms, deposits, and credit checks all pop up. Good news: you don’t have to guess. This page breaks down the basics, gives you solid tips, and points you to the most useful articles on the topic.
New Zealand banks usually offer two main loan types: a standard mortgage for a home and a personal loan for smaller projects. Mortgages come with either a fixed or floating interest rate. Fixed rates lock your interest for a set period (often 2‑5 years), while floating rates move with the market. Most lenders ask for a deposit of at least 10‑20% of the property price. The bigger your deposit, the better your rate is likely to be.
When you apply, the bank will look at three things: your credit score, your income, and your existing debts. They use a loan‑to‑value ratio (LVR) to decide how much they’ll lend. An LVR of 80% means you need to cover the remaining 20% yourself. Some banks will go up to 90% LVR, but that usually comes with higher rates.
First, check your credit score. In New Zealand, a score above 700 is considered good and will give you more negotiating power. If you’re not there yet, pay down any credit‑card balances and avoid missing payments for a few months.
Second, save a solid deposit. Even an extra 5% can shave off a few percentage points on your interest rate. If you’re short on cash, look into government schemes like the First‑Home Loan or KiwiSaver‑linked loans that can help you get a better deal.
Third, keep your debt‑to‑income ratio low. Lenders like to see that your total monthly debt payments (including the new loan) stay under 30% of your gross income. If you have a large car loan or other credit commitments, consider paying those down before you apply.
Finally, gather all the paperwork early: proof of income, tax returns, bank statements, and identification. Having a tidy file speeds up the approval process and shows the bank you’re organized.
Want more detail on any of these points? Check out our article on credit scores needed for a mortgage, the ultimate guide to down‑payment grants, and how to calculate your loan‑to‑value ratio. They’re all linked right here on the tag page.
Remember, every bank has its own calculator, so it’s worth plugging your numbers into a few to see where you land. A small tweak – like a higher deposit or a better credit score – can lower your monthly payment by hundreds of pounds.
In short, a bank loan in New Zealand isn’t a mystery. Know the loan types, meet the deposit and credit requirements, and keep your finances tidy. Follow the tips above, read the related posts, and you’ll be on your way to securing a loan that fits your budget and goals.
Everything you need to know about borrowing $100k from a bank: detailed steps, smart tips, approval requirements, and pitfalls to avoid. Updated for New Zealand in 2025.