How Does a Prenup Affect Your Application for a Mortgage?
For many couples, buying a home together is one of the biggest financial steps they’ll ever take. It often coincides with a significant personal milestone too—moving in together, getting engaged, or preparing for a long-term future. But before you sign the mortgage papers, there’s one legal document that can be just as important as your home loan: a prenup.
Known formally in New Zealand as a contracting out agreement, a prenup is a legal contract that allows a couple to define how their assets will be divided if the relationship ends. While it’s often associated with wealth protection, it can also affect your mortgage application and is worth considering regardless of your current asset position.
What Is a Prenup (Contracting Out Agreement) in NZ?
Under the Property (Relationships) Act 1976, couples who have been in a de facto relationship, married, or in a civil union for three years or more are generally considered to share all relationship property equally if they split up.
A contracting out agreement lets you agree on different terms—essentially opting out of the default rules. You can set out who owns what, how assets (like a house) will be treated, and how debts will be divided. For many couples, especially those with uneven asset contributions or previous relationships, it provides clarity and peace of mind.
How a Prenup Affects Your Mortgage Application
So what does all this have to do with getting a mortgage? Quite a bit, actually.
1. Lenders May Ask About Relationship Agreements
When you apply for a mortgage jointly, the lender assesses both applicants’ income, debts, credit history—and sometimes, their financial arrangements. While a prenup won’t directly affect your borrowing power, some banks may ask if there is a contracting out agreement in place, especially if one partner is contributing a significantly larger deposit.
A well-drafted agreement can help demonstrate to the lender that both parties understand their responsibilities, particularly if the relationship ends during the mortgage term.
2. It Can Help Avoid Future Disputes Over Property Ownership
One of the most common complications in mortgage applications is confusion over who owns what. If only one partner is named on the property title, or if one is contributing most of the deposit, a prenup can clearly state these terms.
Having this in writing can prevent disputes that might otherwise require refinancing, selling the property, or even legal proceedings. From a bank’s perspective, a clear ownership structure is lower risk.
3. It Protects Family Contributions and Inheritance
It’s not unusual for parents to gift or lend money to help their adult children buy a home. A prenup can protect these contributions, especially if they were intended for one person, not the couple as a whole. This can make family members more comfortable with supporting a house purchase—and might help you pull together that all-important deposit.
4. It Encourages Financial Transparency
Getting a mortgage together means sharing your financial lives. A prenup involves legal advice and full disclosure of each person’s assets, liabilities, and income. This process can help couples get on the same page financially, make better decisions together, and avoid surprises later.
Why a Prenup is a Good Idea—Even If You’re Madly in Love
Nobody enters into a relationship planning for it to end. But legal agreements like prenups aren’t about pessimism—they’re about pragmatism. Relationships can change, and having a contracting out agreement in place ensures both parties are protected and aware of their rights and responsibilities from day one.
A prenup can be particularly valuable if:
One partner is contributing a larger deposit
One or both partners own property or businesses prior to the relationship
There are children from a previous relationship
Family members are providing financial support
One partner plans to take time out of the workforce
A Few Things to Know
To be legally binding in New Zealand, a contracting out agreement must:
Be in writing
Be signed by both parties
Have each party receive independent legal advice
Be certified by each party’s lawyer
It’s important not to leave it to the last minute. If you’re planning to buy property with your partner, get legal advice early. Your lawyer can work with your mortgage adviser to ensure everything aligns with your mortgage application and property title.
Buying a Home Together? Plan for the Future Too
Buying a house together is exciting—and it’s also one of the biggest joint commitments a couple can make. A prenup might not seem romantic, but it can give both of you peace of mind and a solid foundation for your financial future.
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