Buying guide

Getting a mortgage if you’re self-employed

Experts explain why it can be more difficult to get a mortgage if you're self-employed.

Last updated: 4 August 2023

If you’re self-employed, you won’t find it as straightforward to get a home loan as you would if you were in a salaried job, but that doesn’t mean you can’t get one

What you’ll learn:

  • Banks won’t look at you the same way if you’re self-employed as if you’re salaried.
  • You’ll have to show at least a year of your accounts and explain them.
  • You’ll likely have to pay a higher mortgage interest rate initially.

Many Kiwi are self-employed, representing 1 in 20 workers, according to Stats NZ. Whether you’re a plumber or an electrician, or contracting in IT or engineering, it may be that this is the way your industry is set up, or it’s the work lifestyle that you prefer.

What mortgage advisers say about options for self-employed

Most banks will look at lending to self-employed home buyers, but they’ll have some questions, says Loan Market mortgage adviser, Bruce Patten. Without a Pay As You Earn (PAYE) slip to present to them, banks will want to see your accounts over at least a year showing workflow and income. If you’ve been self-employed for less than a year, you’ll struggle to get a mortgage, says Bruce.

One of the issues lenders have with self-employed borrowers is they put so many personal expenses through their business, and this affects their income, says the Loan Market mortgage adviser.

Self-employed people will often put through equipment purchases and vehicle depreciation, for instance, and this tends to muddy the water of what they’re actually earning, says Bruce.

For instance, a salaried builder on $45 an hour working 40 hours a week will earn $80,000 to $90,000 a year. Builders on contract, at the same rate, if they’re “writing off” tools, their phone and depreciation on their vehicle, for instance, they might emerge with something closer to a $50,000 income.

“They’ll explain: ‘That’s my accountant, they play around with things so I don’t pay as much tax.’ But this means they can only borrow $200,000 to $300,000 rather than $400,000 to $600,000,” explains Bruce.

“Banks can only go off what they see on paper,” adds the mortgage adviser.

Taking the alternate lender route

There are non-bank lenders who specialise in self-employed home buyers and who take a common sense approach on what independent workers can afford. They can see that enough money is coming through regularly that the mortgage will be paid for.

Senior mortgage adviser, Geoff Bawden says he will consider how many hoops their client might have to jump through with a mainstream bank and might go to an alternate lender who won’t make the loan review process as gruelling.

“You’ll pay slightly more but some are opting to do that because they know they’ll get what they want, “ he says.

And, notes Geoff, the gap between interest rates at mainstream banks and alternative banks or second tier lenders, is narrowing. While a big bank might charge a 6-6.5% interest rate on home loans, a non-bank alternative like Resimac might be more around the 7-7.5% rate.

Home loan provider, Resimac has been lending to self-employed home buyers for over 10 years in New Zealand, and since 1985 in Australia. For the last couple of years it’s been attracting more self-employed customers because of its range of flexible and competitive home loan products.

“Our size and skill enables us to assess more applications on a case-by-case basis as opposed to a more sledgehammer-type credit policy,” explains Resimac General Manager, Luke Jackson.

Q & A with Luke Jackson, General Manager of Resimac NZ

Luke Resimac anwers questions on lending for the self employed

Will more lenders be catering to self-employed people as they become a bigger part of the workforce?

Luke: Contractors like the ones you describe are certainly an established part of the modern day workforce. People don’t work the same way as they did decades ago.

This is why self-employed people need a property lending specialist like Resimac that understands the nuances of their work and income. Our team is able to consider providing solutions to customers who fall just outside the scope of traditional lending criteria.

How do you assess a self-employed borrower?

Luke: Resimac home loan products for self-employed home buyers allow for other forms of income verification at the assessment stage. Self-employed borrowers might be able to show an accountant’s letter or business bank statements to prove their recent financials, for instance.

Are mortgage rates higher for self-employed people?

Luke: A self-employed borrower will typically start their home loan on a higher interest rate than a PAYE borrower. This reflects the level of risk at this early stage. As the self-employed borrower progresses with repayments and improves their record, they may have opportunities to move to another home loan product offering a lower rate.

Would you be more confident about a loan if, in a couple, one of the borrowers was on a salary and the other was self-employed?

Luke:  Yes, we’re happy to consider situations that may include partial self-employed and partial PAYE.

Any other pieces of advice for self-employed home buyers?

Luke: There’s no need to let mainstream lenders tell you which goals you can and cannot achieve.


Karina Reardon
Karina Reardon

Head of Strategic Partnerships -

Karina has worked in the mortgage sector for the last two decades, and is considered an industry expert. As a content author she has a database of financial advisers who share her weekly commentary through their social and digital channels. A well-respected and popular member of the industry, Karina was recently recognised as one of the ‘Elite women in mortgages 2023’.