How do NZ banks calculate your living expenses

Posted by: Prosperity Finance

Expenses can be categorised into four types:

Essential living expenses: Declared essential living expenses will be compared with bank-generated minimum expenses. Whichever is higher will be used.

Food and groceries
Clothing and personal maintenance
Transport and vehicle running costs
Utility costs
Essential medical expenses
Non-private school child education costs

Discretionary living expenses: Items within this category differ from lender to lender, but these costs will be added on top of the essential living expenses.

Private education costs
Childcare costs
Home insurance and rates
Personal and pet insurance
Regular donation
Non-essential medical care costs
Most subscriptions
Other regular long-term expenses

Fixed commitments: This will be added on top of the essential living expenses.

Ongoing board/rental expenses
Debt repayments
Fines
Body Corp fees/Lease fees
Child/family support payments

Credit facilities: A percentage of the limit will be added to the essential living expenses regardless of the actual balance.

Credit cards
Overdraft
Other consumer cards/store cards

Disclaimer: The content in this article are provided for general situation purpose only. To the extent that any such information, opinions, views and recommendations constitute advice, they do not take into account any person’s particular financial situation or goals and, accordingly, do not constitute personalised financial advice. We therefore recommend that you seek advice from your adviser before taking any action.