One Year Self-Employed: Can You Get a Mortgage Yet?

The standard position and the exceptions

Most New Zealand main banks want two years of completed financial statements and tax returns before they will assess self-employed income. Two years lets them see a trend rather than a snapshot, and smooth out a one-off good or bad year.

But 'most banks want two years' is not the same as 'nobody will lend on one'. There is a segment of the market — including some main bank policies in specific circumstances and a broader group of non-bank lenders — that will consider a single year where the surrounding evidence is strong. The question is not whether it is possible but whether your file answers the questions a second year would have answered.

What makes a one-year file work

The lenders who consider these are looking for continuity and credibility. The strongest cases usually have several of the following:

• Same industry, same work. You were a PAYE employee doing this job, and now you do it for yourself. Your income did not appear from nowhere — the structure around it changed. This is the single most persuasive factor.
• A full year of completed financials prepared by a chartered accountant, not management accounts or a spreadsheet.
• Year-to-date figures for the current year showing the trend has continued or improved.
• Contracts or a client base demonstrating forward work — signed agreements, retainers, or a concentrated long-term client relationship.
• GST returns corroborating turnover independently of the financial statements.
• A clean credit file and clean business banking with no dishonours and consistent drawings.
• A larger deposit. This does more work here than almost anywhere else, because it reduces the lender's exposure while the income history is short.

How self-employed income is actually calculated

A common misunderstanding is that lenders look at your business turnover. They do not. They look at the income available to you, which generally means net profit, plus certain add-backs that represent non-cash or discretionary items.

Add-backs commonly considered include depreciation, interest on business debt being refinanced, and one-off non-recurring expenses. Treatment varies between lenders and some are more generous than others. Where there are two years of figures, most lenders will either average them or use the lower year, depending on the trend.

This is why your accountant matters to your mortgage. Financials prepared to minimise tax can understate the income available for lending purposes. If you plan to buy, talk to your accountant about it before the financials are finalised — not after.

The alternatives if one year is not enough

The non-bank-then-refinance path is a legitimate strategy, but only with a clear exit. Go in knowing what you will need to qualify for the refinance and roughly when. Our non-bank to bank refinance case study shows how that sequencing works in practice.

What to prepare

1. Completed financial statements and tax return for your first full year, prepared by a chartered accountant.
2. Year-to-date management figures for the current year.
3. GST returns covering the trading period.
4. Your employment history before going self-employed — CV, prior payslips, or a reference confirming the same industry.
5. Contracts, retainers or client agreements showing forward work.
6. Twelve months of business and personal bank statements.
7. Evidence of your deposit and its source.

See our self-employed mortgage service page for how we build these files.

An honest assessment

Some one-year files are genuinely placeable now. Others are much better served by waiting a few months for the second year's accounts, because the lending available on one year may come with pricing and conditions that cost more than the delay.

We will tell you which situation you are in. Send us your financials and your background — including what you did before — and we will give you a straight answer on whether to go now or wait, and what the difference is likely to cost either way.

How to present your financials

The presentation of a one-year file matters because the lender is being asked to extrapolate from limited data. You are trying to make that extrapolation feel safe. Practical steps:

1. Use a chartered accountant. Financials prepared by a recognised professional carry weight that spreadsheets and software exports do not.
2. Provide year-to-date figures. Nothing supports a single year of accounts better than current-year numbers showing the trend holding or improving.
3. Reconcile to GST returns. Independent corroboration of turnover from a third-party source is persuasive.
4. Include an accountant's letter. A short letter commenting on the business's position, the sustainability of drawings, and any one-off items in the accounts can resolve questions before they are asked.
5. Explain any unusual items. Start-up costs, one-off equipment purchases or a bad debt in year one all depress profit. Flag them with evidence rather than letting the assessor assume they are recurring.

See our self-employed mortgage page for how we assemble these files.

Add-backs: what they are and why they matter

Lenders assess your income as net profit plus certain add-backs — expenses recorded in the accounts that do not represent cash leaving your pocket, or that will not recur. Commonly considered:

Treatment varies between lenders, and some are noticeably more generous than others. This is a significant source of difference in the maximum loan available on identical accounts — and one reason a decline from a single lender tells you very little.

Planning ahead if you can wait

If buying is twelve to eighteen months away, you can materially improve your position between now and then. What actually helps:

• Talk to your accountant about the tax-versus-lending trade-off before the next set of accounts is finalised. Minimising taxable profit reduces assessable income.
• Keep business and personal banking cleanly separated. Mixed accounts make assessment harder and slower.
• Take consistent, regular drawings rather than irregular lump sums. It reads as a sustainable income pattern.
• Build the deposit, which does more for a self-employed file than almost anything else.
• Keep your personal credit clean and reduce consumer debt and credit limits — see what consumer debt costs your borrowing power.
• Secure longer-term contracts where your industry allows, as evidence of forward revenue.

A client who does these things for a year arrives with a genuinely strong two-year file rather than a marginal one-year file, and the difference in both approval likelihood and pricing is usually significant.

This article explains how New Zealand lenders generally assess these situations. It is general information, not personalised financial advice, and lender policy changes often — check your own position with a registered adviser. Official sources: Reserve Bank of New Zealand for lending policy and the OCR, and Sorted.org.nz for independent government-backed money guidance.