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New Zealand has a large and growing self-employed workforce — tradies, consultants, freelancers, business owners, and contractors all fall into this category. While being your own boss has plenty of advantages, it does make the mortgage application process more complex than a standard PAYE (salaried) application. Banks can't just look at your payslips; they need to assess whether your business income is stable, sustainable, and sufficient to service a loan.

The good news: self-employed mortgages are approved every day. You just need to know what to expect and how to prepare.

What Do Banks Need?

The standard requirement for self-employed borrowers is two years of financial documentation. Specifically, most banks want to see:

• Two years of financial statements: Prepared by a chartered accountant. These include a profit and loss statement and balance sheet for your business.
• Two years of personal tax returns (IR3): Showing your personal income after business expenses.
• Two years of business tax returns (if applicable): Particularly for companies or trusts.
• Bank statements: Typically 3–6 months of both personal and business accounts, showing income flowing in and healthy financial management.
• AML documentation: Standard identification and anti-money laundering checks.

Some lenders will consider applications with only one year of financials in limited circumstances — for example, if you were previously in the same industry as an employee before going out on your own. But two years is the standard benchmark.

How Banks Calculate Your Income

Here's where it gets nuanced. Banks don't simply use your latest year's profit figure. Instead, they typically average your last two years of income. If your income has been increasing, this can actually work in your favour — some banks will use the most recent year's figure if the trend is clearly upward and the increase is explainable.

There's also the question of add-backs. Banks may allow certain legitimate business expenses that were deducted from taxable income to be added back when assessing your actual cash income. Common add-backs include:

• Depreciation (a non-cash expense)
• One-off expenses that won't recur
• Interest on business debt that will be repaid

Different banks handle add-backs differently, and this is one area where a good mortgage broker can make a significant difference to the income figure used for your application.

Which Banks Are More Flexible?

Not all banks assess self-employed income the same way. In general:

• Kiwibank and Co-operative Bank tend to take a more case-by-case approach and can be more flexible with self-employed applicants than the major Australian-owned banks.
• ANZ and ASB have fairly robust self-employed credit policies but can be strong options for well-documented applications.
• BNZ and Westpac have specific self-employed lending products and can be good options depending on your business structure.
• Non-bank lenders like Liberty Financial, Liberty, and Pepper Money operate outside some of the restrictions that bind main banks and are often more flexible for complex income situations — though at a higher interest rate.