NZ Home Loans: A Guide to your Options

• Table loans
• Revolving credit loans
• Interest-only loans
• Home loan rates in NZ
• Fixed vs floating rates
• The First Home Loan scheme

Before you choose a lender, it’s helpful to understand the different types of home loans available. Most people end up with a combination that suits their lifestyle and goals—like having the bulk of their mortgage on a fixed-interest table loan, and a smaller portion on a revolving credit facility.

Here are some of the most common home loan structures in New Zealand, with insight from Cameron Muggeridge, mortgage adviser at Loan Market Central.

What it is: The standard home loan option, with regular repayments over the life of your loan.

Pros:

• Regular fortnightly/monthly repayments make budgeting simple.
• Fixed-rate table loans offer repayment certainty.

Cons:

• You start by paying mostly interest; principal payments increase over time.

What it is: Your home loan functions like a giant overdraft. Income is paid directly into the loan account, reducing interest owed.

Pros:

• Flexible: make lump sum repayments or withdraw funds up to your credit limit.
• You can save on interest if you keep your balance low.

Cons:

• Requires discipline—easy to redraw funds and slow down progress.
• Seeing a large negative balance can feel daunting.

💡 Cam notes if you want to do renovations or buy a new car, that revolving credit is there—but it only works if you’re accumulating funds from day one.

What it is: You only pay the interest for a set time (e.g. 1–5 years), with principal payments beginning later.

Pros:

• Lower repayments in the short term.
• Can free up funds for other expenses like renovations.

Cons:

• You’re not paying off any of the loan principal unless you make extra payments.
• Long-term costs are higher if used over an extended period.

Often used by investors or as a temporary solution during periods of financial strain.

What it is: Your mortgage is linked to one or more bank accounts, and the value of your savings offsets the loan balance—so you’re only charged interest on the difference.

Pros:

• Great for families wanting to help children into the market.
• You pay interest only on the net loan balance, which can result in savings.

Cons:

• Works on a floating rate, which is generally higher than fixed.
• Linked savings accounts won’t earn interest while offsetting the mortgage.

Only a few NZ banks currently offer this structure.

As well as choosing your loan type, you’ll also need to decide how your interest is structured. Interest rates in New Zealand move in response to the Official Cash Rate (OCR), and it's important to choose a setup that matches your goals and comfort level with risk.

Pros:

• Your repayments stay the same for the agreed term.
• Offers stability and protects you from rate increases.
• Often comes with special deals from lenders.

Cons:

• You miss out if interest rates fall.
• Break fees may apply if you sell or refinance early.
• Limited ability to make extra repayments (check with your lender).

Pros:

• Flexibility to make lump sum or early repayments.
• You benefit immediately from any drops in interest rates.

Cons:

• Higher risk—your repayments can rise suddenly.
• Often come with a higher interest rate than fixed loans.

The First Home Loan scheme is designed to help Kiwis into their first property by lowering the deposit requirement to just 5%. It’s underwritten by Kāinga Ora and offered through selected New Zealand lenders.

Eligibility criteria:

• NZ citizen, permanent resident or resident visa holder
• Individual income under $95,000 (or combined income under $150,000)
• First home buyer (or in a similar financial position)
• Minimum 5% deposit
• Must intend to live in the home
• Cannot own other property or land

💡 Cam notes that approval rates can be low due to strict criteria—but it’s still worth exploring as a first step.

*We hope this article has provided some helpful information. It's based on our experience and is not intended as a complete guide. Of course, it doesn’t consider your individual needs or situation. If you're thinking about buying or selling a property, you should always get specific advice.