On 7 July 2022 some proposed changes to the Credit Contract and Consumer Finance Act (CCCFA) came into effect around current and future spending.
Prior to 7 July, any funds regularly put in a savings, trust or other account we had to include in your listed expenses. For example, if you had been contributing to KiwiSaver at 10% you had to carry that to the future.
However, the difference is now lenders acknowledge this will and may change after a house purchase. Your adviser can now explain to the bank that your current expenses, KiwiSaver contribution at 10% going forward would change to 3% and that would be in the future budget.
On your application form, the expenditure section is now the budget going forward, rather than current spending.
Another aspect of this also includes tidying up accounts and your spending behaviour so that when you are asked about your current spending, you can review what is necessary going forward and make budget cuts where needed. As well as this, your future expenses include rates and insurance on the new property.
We suggest going to sorted.org.nz to work on your existing or future budget using their budgeting tool, this way you will have a better idea of what you can afford when you sit down with an adviser.
Existing expenses will show on statements which are still needed to be provided when applying for lending, however with an adviser you can discuss future expenses and how that is achievable.
Some expenses may be discretionary for example, the expense will stop or change after the loan, like going to dinner once a week and in the new budget changing to once a month.
Mention changes like this to your adviser so they can make a comment on this in their application to lenders for clarification on how you will succeed within your new budget.