The ultimate guide to mortgages and home loans in New Zealand

In this guide, we cover:

• What is a mortgage? 
• Key components of a home loan 
• Home loan deposits 
• How much can I borrow? 
• The home loan process 
• Mortgage types & options 
• Mortgage tools & calculators 
• Mortgage FAQs 

A mortgage is a loan from a bank or lender that you use to buy a house or property. Think of it as a long-term plan: the bank lends you the money, and in exchange, you agree to pay it back with interest over a set period (often 20 to 30 years). The house itself acts as security for the loan, which means if you can’t pay it back, the lender has the right to sell the property to recover their money.

For many New Zealanders, a mortgage is the key to getting into the property market sooner than saving the full amount upfront. It’s the financial tool that makes homeownership possible.

Mortgages come with a whole lot of jargon that can feel like another language when you’re starting out. To make things easier, we’ve pulled together a plain-English dictionary of the key terms you’re most likely to hear from your mortgage advisor. Each definition is paired with an example of how it might come up in real conversation, so you can walk into those chats feeling confident rather than confused.

Principal: The original amount of money you borrowed from the bank to buy your house.

In practice: “If you put extra money toward your principal, you’ll reduce the total interest you’ll pay over the life of the loan.”

Interest: The extra money the bank charges you for lending you the principal. It’s their fee for the loan, calculated as a percentage of the amount you still owe.

In practice: “Right now, interest rates are higher than last year - locking in a lower rate could save you thousands.”

Learn more about home loan interest rates.

Repayments: The regular payments you make to the bank to pay off both the principal and the interest.

In practice: “We can set your repayments weekly, fortnightly, or monthly - whichever works best with your income.”

Security: The house itself. It’s what the bank holds onto as a promise that you’ll pay back the loan.

In practice: “The bank will register your property as security until your mortgage is fully repaid.”

Default: When you fail to make your loan repayments.

In practice: “If you default on your mortgage, the bank has the right to sell your home to recover what’s owed.”

Learn more about what happens if you can’t pay your mortgage.

Deposit: The lump sum of money you pay upfront when you buy a house. The bigger your deposit, the less you need to borrow.

In practice: “If you can get a 20% deposit together, you’ll avoid having to pay a low-equity premium.”

Learn more about home loan deposits.

Equity: The gap between your property’s current market value and the balance remaining on your mortgage. If your home is worth more than what you owe, you could potentially use that equity to borrow against your property.

In practice: “As your home goes up in value and you pay down your loan, your equity increases, which can give you more borrowing power later.”

Fixed Rate: A mortgage interest rate that stays the same for a set period of time (e.g. one, two, or three years).

In practice: “With a two-year fixed rate, your repayments won’t change for that period, even if market rates rise.”

Floating Rate (or Variable Rate): A mortgage interest rate that can go up or down depending on the market.

In practice: “With a floating rate, you’ll have flexibility to make lump-sum payments at any time, but your repayments could increase if rates rise.”

Learn more about fixed and floating rates.

Want more? Read our extended guide: 38 NZ real estate terms you should know.

For most buyers, your deposit is your ticket onto the property ladder. In New Zealand, the standard deposit for an existing home is 20% of the property’s value (about $160,000 on an $800,000 house). However, this amount varies by property type: new builds may only require 10%, while investment properties typically need 30%.

The bigger your deposit, the less you need to borrow, and the stronger your application looks to lenders. Some low-deposit options are available, but these usually mean being classed as a low-equity borrower, which can come with higher interest rates or extra fees.

• KiwiSaver withdrawals: If you’ve contributed for at least three years, you can usually withdraw most of your balance (leaving $1,000) to put towards your first-home deposit.
• First Home Loan (5% deposit): A Kāinga Ora-backed scheme that lets eligible first-home buyers purchase with just a 5% deposit. Income and property price caps apply, and lenders may charge a 0.5% fee or a higher interest rate.

• Stick to a realistic budget and save consistently.
• Boost your KiwiSaver contributions to maximise what you can withdraw.
• Explore whether a low-deposit option could help you buy sooner.

Learn more about home loan deposits in New Zealand.

One of the first questions home buyers ask is: “How much can I borrow?”

The answer depends on several factors, including your income, spending, deposit, and financial history. Lenders also look at two key ratios set by the Reserve Bank of New Zealand (RBNZ) to check whether you can comfortably manage repayments:

• Debt-to-income ratio (DTI): Caps how much you can borrow based on your before-tax income. In NZ, owner-occupiers can borrow up to 6x their income, and investors up to 7x.
• Loan-to-value ratio (LVR): Shows how much of the property’s value you’re borrowing compared to your deposit. For example, a $100k deposit on a $500k home equals an 80% LVR. The RBNZ sets limits that are stricter for investors than for first-home buyers and occupiers.

Learn more: How much can I borrow for a mortgage?

Lenders review your application in detail for a good reason: they want to protect both you and themselves.

• Protecting you: A mortgage is a huge, long-term commitment. By checking your finances closely, lenders make sure you can afford repayments comfortably, even if interest rates rise or your circumstances change.
• Serviceability tests: Banks don’t just check if you can afford today’s rates. They also run a “stress test” at a higher rate (often 1-3% higher than market rates) to ensure you could still make repayments if rates go up.
• Managing their risk: A bank is lending you a significant amount of money. They need confidence that you’re not likely to default and that you’re a safe borrower.

In short, strict lending rules are designed to make sure you’re set up for success and not put under financial strain.

Getting a mortgage can seem overwhelming at first, but it’s actually a fairly straightforward journey once you break it down. 

There’s more than one way to structure a home loan in New Zealand. The right choice depends on your financial situation, lifestyle, and how much certainty or flexibility you want. Here’s a snapshot of the main options:

• Table loans (most common): Regular repayments that cover both principal and interest, usually on a fixed or floating rate.
• Revolving credit loans: A portion of your loan that is flexible and works like an overdraft, your income reduces the balance, and you can redraw when needed.
• Interest-only loans: For a set time you only pay interest, keeping repayments lower but not reducing the loan itself.
• Offset loans: Your savings and everyday accounts are linked to your mortgage so you pay interest only on the difference.
• Fixed rates: Lock in a set interest rate for a chosen period, giving certainty over repayments.
• Floating rates: Your repayments can change with the market, but you can usually make extra repayments anytime.

Learn more about fixed, floating and split mortgage rates.

Your first mortgage structure won’t last forever. When a fixed-rate period ends, you’ll need to refix (choose a new rate and term) or refinance (move to a different lender or restructure your loan). This is a good time to review whether your loan type still suits your finances and goals. Even small changes in rates or structure can save you money over the long term.

Learn more about the different types of mortgages and options.

Sometimes you just need to run the numbers. These mortgage calculators and tools make it easy to estimate repayments, check your equity, and explore recent property sales before you talk to a lender.

• Mortgage Calculator: Crunch the numbers on what your repayments could look like.
• Property Valuation: See what your current home is worth to understand your equity.
• Sold Property Insights: Search over 1.9 million recently sold properties across New Zealand to see local prices and market trends.

Still have questions? You’re not alone. Here are answers to some of the most common mortgage queries from Kiwi buyers.

Q: Can I pay off my mortgage faster?

A: Yes, even small changes can make a big difference over the life of your loan. Options include making extra repayments, switching to fortnightly payments, or putting any lump sums (like bonuses or tax refunds) straight onto your mortgage. The more you reduce your principal early, the less interest you’ll pay overall.

Check out our 20 tips to pay off your mortgage faster for practical ways to shave years off your loan.

Q: How long does it take to get a mortgage?

A: From pre-approval to settlement, the process usually takes a few weeks. How quickly it moves depends on how fast you can provide the required documents, how complex your financial situation is, and how long it takes you to find the right property.

Q: Should I use a mortgage broker or go directly to a bank? 

A: A mortgage broker works on your behalf and can compare loans from multiple lenders to help you find the right fit. A bank can only offer its own products, but some buyers prefer dealing with their existing bank directly. Using a broker can save time and potentially get you a sharper deal but the best option depends on your situation.

Learn more in our guide: Mortgage brokers vs banks: what’s best for you?

Q: What is the Official Cash Rate (OCR) and how does it affect me? 

A: The Official Cash Rate (OCR) is set by the Reserve Bank of New Zealand and helps guide the interest rates that banks charge on loans and mortgages. When the OCR goes up, floating and short-term rates usually rise, making repayments more expensive. When it drops, rates tend to fall, which can make borrowing cheaper.

For example, if the OCR rises by 0.25%, your repayments on a $500,000 loan could increase by around $70–$80 per month, depending on your interest rate.

Learn more: What is the Official Cash Rate (OCR)?  |  When is the next OCR announcement in NZ?

Q: Can I use equity from my existing home to buy another property? 

A: Yes, many homeowners use the equity they’ve built up to fund a second property, renovations, or an investment. It’s a common way for Kiwi to grow their property portfolio.

For example, if your home is worth $800,000 and you still owe $400,000 on your mortgage, you have $400,000 in equity some of which could be used to secure another loan.

Learn more in our guide: Using equity to buy a second property, renovate, or invest.

Q: Can I use KiwiSaver for my first home?

A: Yes, if you’ve been contributing for at least three years, you may be able to withdraw most of your balance to put toward a deposit. Some buyers may also qualify for the Kāinga Ora First Home Grant.

Learn more in our guide: How does Kiwisaver first home withdrawal work?