Mortgage Declined?
One bank's decision is not the final word. Different lenders have different policies, risk appetites, and products. Understanding why you were declined is the first step to knowing what comes next.
One lender's decline ≠ all lenders
New Zealand banks each have their own internal credit policies that determine what they will and won't lend on. A decline from one bank does not mean you are unable to borrow — it means that lender's policy does not fit your situation right now.
An adviser with access to multiple lenders can identify which banks are likely to approve your application and why — rather than you having to discover this through trial and error (which risks multiple credit enquiries on your file).
Common reasons for decline
Credit history
Missed payments, defaults, bankruptcies, or judgements on your credit file. The severity and recency of the issue affects how each lender views it. Some lenders are more tolerant of older or minor credit issues than others.
Income verification
The bank cannot verify your income, or the income you have declared does not match what they can see in your documents. Common for self-employed borrowers, contractors, or people with complex income structures.
Insufficient deposit
Your deposit falls below the bank's LVR threshold. This may be a temporary issue — you may qualify in the future as your savings grow, or through the First Home Loan scheme if eligible.
Debt-to-income (DTI) threshold
Your total debt is above the high-DTI threshold set by the RBNZ relative to your income. Reducing other debts or increasing income over time can improve your DTI position.
Property type
The bank is not comfortable lending on the specific property — lifestyle blocks, leasehold properties, small apartments, properties with structural issues, or properties in certain areas may not meet their security criteria.
Bank policy
Each bank has its own internal credit policy and appetite for different types of borrowers. A decline from one bank for a policy reason does not mean other banks will take the same view.
What to do next
Understand the reason
Ask the bank why your application was declined. Get this in writing if possible. Understanding the specific reason helps determine the best path forward.
Don't apply again immediately
Multiple credit applications create multiple credit enquiries on your file, which can compound the problem. Pause and get advice before applying anywhere else.
Talk to an adviser
An adviser can review your situation, identify lenders whose criteria you do meet, and advise on whether to apply now or what to improve first.
Consider your options
Options may include a different main bank, a non-bank lender (higher rates, more flexible criteria), or a plan to improve your position and apply again in 6–12 months.
Non-bank lenders — when they make sense
Non-bank lenders operate outside the main bank regulatory framework and often have more flexible lending criteria. They are a genuine option in some circumstances:
Credit issues
Non-banks may lend to borrowers with a recent default or adverse credit history that main banks won't accept.
Complex income
More flexible income assessment for self-employed, contractors, or borrowers with multiple income sources.
Unusual properties
Some non-banks will lend on property types that main banks decline — lifestyle blocks, commercial, or unusual structures.
Higher rates
The trade-off is a higher interest rate than the main banks. Non-bank lending is often used as a short-term bridge while the borrower improves their position.
Had your mortgage declined?
Jeremy regularly reviews declined applications and can give you an honest assessment of your options — including which lenders may say yes and what steps would help if you need to wait and improve. Free consultation, no obligation.
Have your situation reviewed →Jeremy Zinzan (FSP1007062) is a Financial Adviser providing financial advice through Vega Mortgages Limited (FSP653431), authorised under the FAP licence held by Vega Group Holdings Limited (FSP773794).