FAQs | MortgageRates.co.nz


Here are some answers to common questions you may have:

When purchasing an owner-occupied property you can generally borrow around five times your gross annual income. Lenders will require evidence that you're in a position to service the mortgage based on paying it off over 30 years, and at a mortgage rate of around 9.00%, which is higher than actual rates. If you have a rental property, a maximum of 80% of the rental income can be included for testing your ability to afford the loan.

Your deposit is determined by your property purpose. If it's for a home you'll be living in, you can buy with as little as 5% in some cases if you meet certain criteria. That said, the standard deposit is 20%, and banks often offer better mortgage rates (and cash backs) to customers that have at least a 20% deposit. If you buy an investment property, you'll need at least a 35% deposit, unless you're buying a new build.

Banks can offer a wide range of their own mortgage products and are usually negotiable, sometimes waiving fees or discounts on day-to-day banking costs if you take out a mortgage with them. However, a personal banker only works for one bank and is limited in how much advice they can give.

A mortgage broker can arrange and negotiate mortgages between the borrower and the lender, and because they deal with multiple banks they can offer more options. They can also use their buying power to get a better deal for the borrower. The key thing is choosing a broker who is unbiased, and has access to all (or most) of the banks to ensure the best possible deal. Read 50 reasons to use a Mortgage Broker.

That's a tricky one! While shorter terms like the 12-month term can often be quite popular options, it's important to note that if you repay a fixed rate mortgage early, you can end up with some pretty high break fees. The best mortgage rate term will really depend on your personal circumstances — the cheapest rate isn't necessarily the best one for you! A mortgage broker can help you find out what the best term for your situation would be.

Splitting your home loan across multiple fixed rate terms means your entire loan won't mature at once. It allows you to always have part of your loan maturing that you can make lump sum payments into as well as the certainty of having part of your loan still fixed. If mortgage rates are going up, splitting your loans will smooth out the impact and make it easier to adjust to higher rates.

When you repay a fixed rate loan early, the lender also needs to break its fixed rate funding. This is a real cost to the lender, which the lender passes on to you as a fee. These costs only typically occur if mortgage rates drop between when you fix and when you repay. Roughly it's the rate difference applied to the loan balance over what would have been its remaining fixed rate term.

Owing debts can limit the amount you can borrow for a mortgage, since a portion of your income will be tied up to paying off debts. That said, lenders will look holistically at your financial position when assessing your application — so having existing debt doesn't necessarily mean you won't be able to get a mortgage. Just keep in mind that the less debt you have, the higher the potential lending capacity you'll have.

In simplicity, the answer is no. However, if your available deposit is higher than 20% or even 10%, you could look at only using a 20% or 10% deposit and retaining the difference to repay some or all of the existing debt.

There are a few ways to potentially use a parents' property/equity to help you purchase your own home. The most important thing to find out first is whether or not your parents have equity available in their home and if they're still earning an income.

Because of the Responsible Lending Act, banks do require parents to meet servicing standards and depending on the level of their income, this will determine which options may be available for them to access and allow you to use their equity.

In addition to being able to withdraw from your KiwiSaver, there's also a First Home Grant which you can apply for. To be eligible for this, you must:

  • Have contributed at least 3% of your income to a KiwiSaver scheme for at least three years
  • Be planning to live in the house for at least six months
  • Have a single income of up to $95,000, or a combined yearly income of $150,000 or less (before tax) for two or more buyers
  • Have a deposit of at least 5% (this can include any gifted money or savings, your KiwiSaver withdrawal, or even funds from your First Home Grant pre-approval/approval)

The property that you're buying will also need to fit within the following price caps:

RegionExisting propertiesNew properties
Queenstown Lake Districts$875,000$925,000
Tauranga and Western Bay of Plenty$800,000$875,000
Wellington, Hutt Valley and Kāpiti Coast$750,000$925,000
Nelson, Tasman$650,000$875,000
Hamilton, Waipā and Waikato$650,000$775,000
Christchurch, Selwyn and Waimakariri$575,000$775,000
Rest of New Zealand$400,000 - $875,000$650,000 - $925,000

Unfortunately, KiwiSaver is only approved for purchases of a home that you'll be living in yourself.

There is an allowance for a second chance withdrawal. If you don't currently own a property and you don't have funds which contribute to at least a 20% deposit, then there is a possibility that you can access your KiwiSaver again for another home purchase. Approval will sit with your KiwiSaver provider, and you'll also need to confirm your eligibility with Kāinga Ora.

Rate of the day is what we consider the best value mortgage rate for a loan with a loan-to-value ratio below 80%, that is available to new and existing borrowers, and is not limited by the size of the loan.

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