Understanding your home loan options is an important step in choosing a structure that suits your goals, future plans, and financial situation. Different loan types offer different benefits depending on whether you prioritise certainty, flexibility, or the ability to reduce interest over time. Below is a simple breakdown of the most common home loan types and how they work.
Our team is here to help you work through these options and find a home loan structure that best suits your situation. If you’d like support or have any questions, get in touch with us now and we’ll help you work through what’s right for you.
“Andrew came highly recommended to us by a work colleague and we couldn’t have been happier with his service. This was our first home and he answered every question we threw at him while providing honest, detailed information on the questions we didn’t know to ask. Everything was thorough and on-time and we have no hesitation in recommending him as a mortgage broker.”
- Alyce & Sam
Your interest rate is locked in for a set period (e.g. 6 months to 5 years). Your repayments stay the same during that time, giving you certainty and easier budgeting. The trade-off is less flexibility if you want to make large extra repayments, however most Banks still allow you to repay up to 5% of your loan balance each year above the minimum without penalty.
Your interest rate can move up or down at any time. Repayments may change as rates change, but you usually have more flexibility to make extra repayments or pay the loan off early without penalty.
This works like a large overdraft secured against your home. You can deposit and withdraw money as needed (up to your approved limit), and interest is calculated on the balance owing. The lower your balance, the less interest you pay. It’s a very flexible option, but it does require good budgeting discipline to use effectively.
Your savings accounts are linked to your home loan. Instead of earning interest on your savings, the balance is “offset” against your loan, meaning you only pay interest on the difference. It helps reduce interest while keeping your savings accessible.
Non-bank lenders can be a useful option for borrowers who may not fit traditional bank lending criteria, including self-employed applicants, people with more complex financial situations, or those who may have had credit challenges in the past.
These lenders often have more flexible lending policies compared to New Zealand’s major banks, which can make them easier to work with in certain circumstances. However, they may also come with different pricing structures, including potentially higher interest rates depending on the level of risk and the type of loan.
If you’re unsure which option is right for you, our team at Personalised Mortgages can help compare both bank and non-bank options to find a solution that suits your situation.
Whether you’re looking for expert mortgage advice to get you into your first home, or you’re upgrading, refinancing or looking for an investment property, our experienced team can help find the right solution for you.
