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Living beyond your means

Are you living beyond your means? It's easy to do in today's society, with so many temptations and pressures to keep up with others' lifestyles. But if you're thinking of getting a mortgage in New Zealand, it's important to understand how living beyond your means can affect your chances of getting approved for a loan.

Living beyond your means means spending more money than you earn, or taking on debt that you can't afford to repay. This can happen for many reasons, such as:

Trying to maintain a certain standard of living, even if you don't have the income to support it.
Using credit cards or loans to pay for everyday expenses, instead of saving up or cutting back.
Overspending on discretionary items like holidays, clothes, or entertainment, instead of prioritising long-term financial goals.

Failing to budget or track your expenses, so you don't realise how much you're really spending. While living beyond your means might feel good in the short term, it can have serious consequences for your financial future. You may end up with high levels of debt, poor credit scores, and little savings or investments. This can make it harder to achieve your goals, such as buying a home.

When you apply for a mortgage in New Zealand, lenders will look at many factors to determine whether you're a good candidate for a loan. One of the most important factors is your income and expenses. Lenders want to see that you have a stable income that can cover your mortgage payments, as well as other living expenses like food, utilities, and insurance.

If you're living beyond your means, however, you may not have a stable income or a realistic budget. You may be relying on credit cards or other debt to make ends meet, which can hurt your credit score and make you a riskier borrower. You may also have little savings or investments to use as a down payment or to cover unexpected expenses.

All of these factors can make it harder to get approved for a mortgage. Lenders may view you as a risky borrower, and may either reject your application or offer you a higher interest rate to compensate for the added risk.

So, what can you do if you're living beyond your means and want to get a mortgage? Here are some tips:

1. Create a realistic budget: Start by tracking your income and expenses, and figuring out where your money is going. Look for areas where you can cut back, such as dining out or buying clothes, and prioritise your long-term goals like saving for a down payment.

2. Pay off debt: If you have high levels of debt, focus on paying it down as quickly as possible. This will not only improve your credit score, but also free up more income for savings and mortgage payments.

3. Build up savings: Try to save as much as you can for a down payment and other expenses related to buying a home, such as closing costs and moving expenses. Having a solid savings cushion can also help you weather any unexpected financial challenges that may arise.

4. Be patient: If you're not quite ready to apply for a mortgage yet, don't rush into it. Take the time to get your finances in order, improve your credit score, and save up for a down payment. This will not only improve your chances of getting approved, but also make you a more attractive borrower overall.

By living within your means and prioritising your long-term financial goals, you can set yourself up for success when it comes to getting a mortgage. Don't let short-term temptations derail your financial future – start planning for your dream home today!

Disclaimer: This content is not intended to replace advice from your mortgage advisor, and does not take into account your specific financial situation. This is not personalised advice and is factual only. Please do your research and work alongside a mortgage professional to find the best solutions for you. Please get in touch if you’d like specific advice or just want to have a chat!


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