Can Flatmate Income Help You Get a Mortgage in NZ?
Having a flatmate can be a clever way to offset your mortgage costs—but how helpful is that income when you're applying for a loan? And once you're in the house, how can you use that extra cash to accelerate your financial goals?
Let’s break down the difference between flatmates and boarders, what banks really allow, and how to use flatmate income effectively.
Is There a Difference Between a Flatmate and a Boarder?
For mortgage purposes: No. Banks treat flatmate income and boarder income the same way when assessing affordability. If your broker refers to “boarder income,” they simply mean rent you receive from someone living in your home.
For tax purposes: Yes. A flatmate typically pays for a room and may contribute to shared bills. A boarder, on the other hand, often receives additional services such as meals or laundry. This distinction can affect how the income is taxed, so it’s worth speaking to your accountant if you're unsure.
How Much Flatmate Income Will the Bank Count?
If you’re hoping a couple of flatmates will double your borrowing power, think again. Most banks limit flatmate income to $150–$200 per week, and only allow one or two flatmates in your application.
Yes, you might be able to rent out a room for $300 in central Auckland—but banks take a conservative approach. They want to know you can still make repayments if the rental market weakens, or if your flatmate leaves unexpectedly.
Many lenders now only count one flatmate’s income, particularly post-COVID, to reduce reliance on shared living situations. And for high-LVR loans (those with less than 20% deposit), banks often won’t allow any flatmate income at all. These loans are seen as higher risk, so the borrower’s own income must cover the full repayments.
What If You Promise the Bank You'll Get a Flatmate?
In the past, borrowers could claim they planned to get a flatmate—even if they never did. But under today’s Responsible Lending Code, banks are checking.
If you told the bank you'd have a flatmate contributing $200 a week, and then settle the loan with no such income showing up in your account, you might get a follow-up request from the lender to explain. It's not necessarily a deal-breaker, but it's something to be aware of. Make sure you're serious about actually bringing someone on board if that's part of your approval.
Can Flatmate Income Really Make a Difference?
Absolutely—if you use it wisely.
Let’s say you receive $200 per week in flatmate income. That’s $10,400 per year. If you put that directly toward your mortgage, it can make a huge dent in interest over time.
Roughly speaking, $1 extra paid on your mortgage now can save around $5 in interest over a 30-year term. So that $200 per week could be saving you around $1,000 per week in long-term interest costs—if you don’t spend it elsewhere.
Should You Use Flatmate Income to Pay Off Your Mortgage or Credit Cards?
In most cases, pay down high-interest debt first. Credit cards often charge 18–20% interest, while mortgages are closer to 7%. The math is simple: prioritise the higher-cost debt.
That said, if you’re just repaying the credit card and then racking it up again, you’re not really improving your position. A better approach might be:
Cut up the card
Channel flatmate income into repayments
Once it’s gone, close the card
Then direct that cashflow toward your mortgage
How Can You Make Extra Mortgage Payments with Flatmate Income?
This will depend on your mortgage structure and lender. Here are a few common options:
1. Increase Your Regular Payments
Many banks allow you to increase your regular repayments by a set amount (e.g. up to $1,000 per month) without penalty.
2. Use a Revolving Credit or Offset Account
If you have one of these accounts, you can deposit extra funds at any time. This reduces the interest calculated on your loan balance, while still giving you access to the money if needed. Be disciplined though—these accounts can be tempting to dip into for spending.
3. Use a Separate Savings Account
If your mortgage is on a fixed rate and lump sum payments incur break fees, stash the extra money in a savings account until you can make a lump sum payment penalty-free—usually when your rate comes up for renewal.
Need help checking the rules for your specific bank? A quick call to your mortgage adviser can clarify your options.
How Many Flatmates Can You Include in Your Application?
Most banks will accept income from up to two flatmates, each capped at $150–$200 per week. But remember:
If you're approved based on income from two flatmates, you’ll need to buy a home with three bedrooms—one for yourself and one for each flatmate.
Couples don't count as two flatmates.
And for high-LVR mortgages (less than 20% deposit), flatmate income may not be accepted at all.
What Else Should You Consider Before Taking on a Flatmate?
Flatmates bring more than just income. Here are a few pros and cons to think through:
Pros
Extra income can fast-track mortgage repayment
Helps with bills and household costs
Social connection (for the right flatmate)
Cons
Extra wear and tear on the house
Loss of privacy
Legal obligations—once someone moves in, it may be harder to ask them to leave
Flatmate income can affect benefits or tax credits in some situations
Be sure to set expectations early—ideally with a flatmate agreement that outlines rent, bills, notice periods, and responsibilities.
So, Should You Get a Flatmate?
If you’re comfortable sharing your home, the financial upside is clear—as long as the income goes toward your goals and doesn’t just get absorbed into everyday spending.
Flatmate income can:
Slightly improve your mortgage affordability (under strict rules)
Provide regular extra cash for repayments
Save you thousands in interest over time
But remember—it’s not a silver bullet. The bank will still expect your income alone to carry most of the load, especially if your deposit is less than 20%.
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