You’ve been thinking about buying your first home. You’ve probably browsed a few listings, checked a mortgage calculator, and maybe even spoken to a broker. But what happens if you realise you're not quite ready?
Whether it's your deposit, income, debts, or credit score holding you back, the good news is you're not alone. There’s plenty you can do to get on track.
At Luminate Financial Group, we help people every day who are just starting out. Some need a few weeks to tidy up their accounts. Others need a longer-term strategy. Either way, being not mortgage ready is just a starting point, not a dead end.
This guide will walk you through exactly what to do if you're not quite there yet and how to turn that into a clear plan toward buying your first home.
Step 1: Understand Why You’re Not Ready Yet
The first step is knowing what’s holding you back. For most first-home buyers, there are five common reasons why a mortgage might not be approved:
- Your deposit is too small
- Your income isn't quite high enough
- Your existing debts are too high
- Your bank account conduct needs improvement
- Your credit history has issues
At Luminate, we start with a no-obligation discovery session to assess your current position. We’ll tell you honestly and clearly what’s working in your favour, what might be holding you back, and what you need to improve.
Step 2: Build a Savings Plan That Works
One of the biggest challenges is saving a deposit. Ideally, most banks want at least 10 percent, and 20 percent will give you access to better interest rates and lower risk fees. But that’s not always realistic straight away.
The key is to create a consistent, trackable savings pattern that lenders can see.
If your savings are a bit ad hoc, now is the time to set up a dedicated savings account. Set up an automatic transfer each payday and treat it like a non-negotiable bill.
You’ll also want to keep the account tidy. Lenders want to see genuine savings, not money coming in and out or lump sums from unknown sources.
If you’re using KiwiSaver, check your eligibility for a First Home Loan. Many first-home buyers are surprised to find they’re already part-way there.
Step 3: Tidy Up Your Debts
Credit cards, car loans, personal loans, and Buy Now Pay Later accounts can have a big impact on your borrowing power.
If you’re serious about getting mortgage ready, now is the time to reduce or eliminate these debts.
Focus first on high-interest debts like credit cards. If you’ve got multiple loans, consider consolidating them or paying down the smallest one first. Cancel any unused credit cards or limit increases. Even if the balance is zero, the limit still affects your application.
If you have Buy Now Pay Later accounts like Afterpay or Laybuy, pay them off and stop using them if possible. Lenders view these as signs of short-term spending habits, which can work against you.
Step 4: Review Your Bank Account Conduct
Lenders don’t just look at your income and debts. They also look at your day-to-day bank activity. This includes how often you overdraw your account, whether you pay bills on time, and how you manage your money.
Here’s how to make your accounts mortgage friendly:
- Make sure all bills and automatic payments are covered
- Avoid unarranged overdrafts or late fees
- Don’t bounce payments
- Reduce gambling or irregular cash withdrawals
- Keep personal accounts and business accounts separate if you’re self-employed
It takes about three months of clean account history to turn things around. So even if you’re not applying yet, start managing your accounts now as if you are.
Step 5: Check Your Credit History
Your credit report shows how you’ve managed past debts, including loans, credit cards, utilities, and mobile phone plans. Lenders use this report to assess your reliability.
You can check your credit report for free through agencies like Centrix, Equifax, or Illion. If you find errors or unpaid defaults, now is the time to address them.
If you have old debts, pay them off and ask for confirmation in writing. If you’ve missed payments in the past, don’t worry. Showing good conduct going forward helps rebuild your profile.
At Luminate, we can help you understand your credit report and what it means for your application.
Step 6: Understand Your Income Options
Sometimes a home loan is declined simply because your income isn’t quite high enough for the size of loan you want.
This doesn’t always mean you’re stuck. Here are a few options we explore with clients:
- Using a co-borrower such as a partner or family member
- Applying with joint income
- Adding boarder or flatmate income
- Negotiating a raise or moving to a more stable role
- Reducing debt to improve serviceability
If your income is variable or seasonal, we may need to show a longer history to support it. This is especially important for contractors, casual workers, or self-employed people.
Step 7: Get Professional Advice Early
You don’t need to figure all this out on your own. In fact, the earlier you speak with a mortgage adviser, the sooner you can identify the key things to work on.
At Luminate Financial Group, we offer free planning sessions for first-home buyers. We’ll review your situation, explain your borrowing potential, and help you build a clear plan, even if you’re six or twelve months away from being ready.
Many clients tell us they wish they’d started the process sooner. A conversation today can save you months of guesswork and help you avoid mistakes that could hold you back later.
Final Thoughts
Not being mortgage ready today doesn't mean you'll never get there. In most cases, it simply means a few things need adjusting. With the right advice and a clear plan, you can make progress quickly.
Whether you need to save more, tidy your debts, or improve your account conduct, every step counts. With consistent action, buying your first home moves from being a dream to a real possibility.
Want to know what’s holding you back and how to fix it?
Book your free First-Home Planning Session with Luminate.
We’ll help you map out a personalised strategy so you can go from not ready to mortgage approved on your terms.
Visit www.luminate.co.nz | Email askus@luminate.co.nz | Call 0800 333 400
