Question 1

How much deposit do I need to buy my first home in New Zealand?

Accepted Answer

Most banks require a minimum 20% deposit to avoid Low Equity Margin (LEM) fees. However, first-home buyers can sometimes get approved with as little as 10% deposit, though you'll pay LEM fees (typically 0.25% to 1% extra on your interest rate). Some banks may go as low as 5% for certain circumstances. If you have KiwiSaver, you can withdraw your savings (minus $1,000) for your first home deposit.

Question 2

What is the First Home Grant and am I eligible?

Accepted Answer

The First Home Grant provides up to $5,000 per person ($10,000 for couples) towards your first home purchase. To qualify, you must: be a first-home buyer, meet income caps (currently $95,000 for individuals, $150,000 for couples buying together), have contributed to KiwiSaver for at least 3 years, and purchase a home within the price caps for your region. The house price caps vary by location - check Kāinga Ora's website for current limits in your area.

Question 3

Should I get pre-approval before house hunting?

Accepted Answer

Yes, absolutely. Pre-approval (also called conditional approval) tells you exactly how much you can borrow, making your offer stronger when you find the right property. It typically lasts 3-6 months and shows real estate agents and sellers you're a serious buyer. The pre-approval process involves providing financial documents, credit checks, and an assessment of your income and expenses. Having pre-approval can speed up the settlement process significantly once your offer is accepted.

Question 4

What is an LVR and why does it matter?

Accepted Answer

LVR stands for Loan-to-Value Ratio - it's the percentage of the property value you're borrowing. For example, if you buy a $600,000 house with a $120,000 deposit, you're borrowing $480,000, which is 80% LVR. Banks prefer LVRs of 80% or less because it reduces their risk. If your LVR is above 80%, you'll typically pay a Low Equity Margin (LEM) - an extra fee added to your interest rate. Higher LVRs also mean stricter lending criteria and potentially higher interest rates.

Question 5

Can I use my KiwiSaver for a house deposit?

Accepted Answer

Yes! If you're buying your first home, you can withdraw your KiwiSaver savings (minus $1,000 which must stay in your account) to use as a deposit. You need to have contributed to KiwiSaver for at least 3 years. Your employer contributions and government contributions can also be withdrawn. Note that you cannot use KiwiSaver funds for investment properties or if you've owned property before (with some exceptions).

Question 6

What ongoing costs should I budget for besides the mortgage?

Accepted Answer

Beyond your mortgage payments, budget for: rates (council taxes, typically $2,000-$5,000+ per year), home insurance ($800-$2,000+ annually), maintenance and repairs (budget 1-2% of property value per year), utilities (power, water, internet), and potentially body corporate fees if you buy an apartment or townhouse. Many first-home buyers underestimate these costs, so it's crucial to factor them in when deciding how much you can afford to borrow.

Question 7

What's the difference between fixed and floating interest rates?

Accepted Answer

Fixed rates stay the same for a set period (typically 6 months to 5 years), giving you certainty on your repayments. Floating rates can change at any time based on market conditions - they can go up or down. Fixed rates are generally higher than floating but offer protection if rates rise. Many Kiwis split their mortgage between fixed and floating to balance certainty with flexibility. You can make extra payments more easily on floating portions without penalty.

Question 8

What is a Low Equity Margin (LEM)?

Accepted Answer

Low Equity Margin (LEM) is an additional fee banks charge when you borrow more than 80% of the property value. It's added to your interest rate and typically ranges from 0.25% to 1.00% depending on your LVR and the bank. For example, if your base rate is 6.50% and your LEM is 0.75%, you'll actually pay 7.25%. The LEM compensates the bank for the higher risk of lending with a smaller deposit. Once you pay down your mortgage below 80% LVR, you can often ask to have the LEM removed.

Question 9

How long should I fix my mortgage for?

Accepted Answer

There's no one-size-fits-all answer - it depends on your circumstances and market outlook. Shorter terms (6-12 months) offer flexibility and lower rates but risk rate increases when you refix. Longer terms (2-5 years) provide certainty but typically have higher rates and less flexibility. Many New Zealanders split their mortgage across different terms (e.g., 50% on 1 year, 50% on 2 years) to balance risk. Consider your job security, future plans, and whether you expect rates to rise or fall.

Question 10

What's the difference between principal and interest?

Accepted Answer

Principal is the actual amount you borrowed - the original loan. Interest is what the bank charges you to borrow that money. In your mortgage payments, part goes toward paying off the principal (reducing your debt) and part goes toward paying interest (the bank's fee). Early in your mortgage, most of your payment goes toward interest. As time goes on and your principal decreases, more of each payment goes toward paying down the principal. This is called amortization.

Question 11

Should I choose weekly, fortnightly, or monthly repayments?

Accepted Answer

All three options cost roughly the same over time, but weekly or fortnightly payments can save you a small amount in interest because you're paying the bank more frequently. The savings are modest but can add up - typically a few thousand dollars over a 30-year mortgage. More importantly, choose what matches your pay cycle. If you get paid fortnightly, set up fortnightly mortgage payments so the money leaves your account right after payday, making budgeting easier.

Question 12

What is mortgage insurance and do I need it?

Accepted Answer

Mortgage insurance (also called mortgage protection insurance) pays out your mortgage if you die or become unable to work due to illness or injury. It's not compulsory, but many banks strongly recommend it. It's different from home insurance (which covers the property itself). Whether you need it depends on your circumstances - if you have dependents relying on your income or if losing your income would mean losing your home, it's worth considering. Shop around as rates vary significantly between providers.

Question 13

What is a split loan and when should I use one?

Accepted Answer

A split loan divides your mortgage into separate portions, each with different interest rates or terms. For example, you might put 50% on a 1-year fixed rate and 50% on a 2-year fixed rate. This spreads your risk - if rates drop, part of your loan can be refixed sooner at lower rates. If rates rise, part of your loan is still locked in at the old lower rate. Splits also let you combine fixed and floating portions, giving you flexibility to make extra payments on the floating part while enjoying certainty on the fixed part.

Question 14

How does an offset account work?

Accepted Answer

An offset account is a savings account linked to your mortgage. Instead of earning interest on your savings, the balance reduces the amount of your mortgage that charges interest. For example, if you have a $400,000 mortgage and $50,000 in your offset account, you only pay interest on $350,000. Your actual mortgage payment stays the same, but more goes toward paying off principal. This can save you thousands in interest and reduce your mortgage term. Your money stays accessible unlike making extra payments directly to the mortgage.

Question 15

What is WAIR and how is it calculated?

Accepted Answer

WAIR stands for Weighted Average Interest Rate - it's the overall interest rate across all your split loan portions. For example, if you have $200,000 at 6.5% and $200,000 at 6.0%, your WAIR is 6.25%. It's calculated by multiplying each loan portion by its rate, adding those together, and dividing by the total loan amount. WAIR is useful for comparing your overall mortgage cost when you have multiple splits at different rates.

Question 16

Can I make extra payments on my mortgage?

Accepted Answer

Yes, but it depends on your loan type. Floating rate mortgages allow unlimited extra payments at any time with no penalty. Fixed rate mortgages typically allow up to 5-20% extra per year (the limit varies by bank) before penalties apply. Extra payments go directly toward reducing your principal, which saves you interest and shortens your mortgage term. Even small extra payments add up significantly over time - an extra $50/week can save you tens of thousands in interest over a 30-year loan.

Question 17

What's the difference between an offset account and a redraw facility?

Accepted Answer

An offset account is a separate savings account where your balance reduces the interest charged on your mortgage, but your money stays accessible. A redraw facility lets you make extra payments to your mortgage and then "redraw" (withdraw) those extra payments if needed. Offset accounts give you easier access to your money and often better flexibility. Redraw facilities may have restrictions, fees, or require bank approval. Some banks offer both options - check what works best for your situation.

Question 18

What's the difference between refixing and refinancing?

Accepted Answer

Refixing is when your fixed-term ends and you set a new fixed rate with the same bank - it's straightforward and usually free. Refinancing is switching your mortgage to a different bank entirely. You refinance to get a better rate, better features, or more suitable terms. Refinancing involves more paperwork, legal fees ($500-$2,000), and sometimes break fees if you're leaving before your fixed term ends. However, the savings from a lower rate can outweigh these costs. Use RateMate to compare what you could save!

Question 19

When should I start comparing rates before my fixed term ends?

Accepted Answer

Start looking 6-8 weeks before your fixed term ends. This gives you time to compare rates, negotiate with your current bank, and potentially apply to switch banks if you find a better deal. Banks often send refix notices 4-8 weeks before your term expires. Don't wait until the last minute - if you miss your refix date, you'll automatically roll onto a floating rate, which is usually higher than fixed rates. Set a calendar reminder for 2 months before your refix date.

Question 20

Can I negotiate my mortgage rate with my bank?

Accepted Answer

Absolutely! Many Kiwis don't realize rates are often negotiable. Before your refix, research what other banks are offering (use RateMate to compare), then call your bank and ask for a better rate. Mention competitor rates you've found. Banks value existing customers and often match or beat competitor rates to keep you. Be polite but firm. If they won't budge and you've found a significantly better rate elsewhere, be prepared to refinance. Even 0.25% lower can save you thousands over your mortgage term.

Question 21

What are break fees and when do I have to pay them?

Accepted Answer

Break fees (also called early repayment fees) are charged if you break your fixed-rate contract before the term ends - for example, if you want to refinance to another bank or sell your property during a fixed period. The fee compensates the bank for lost interest. Break fees can range from zero to tens of thousands of dollars, depending on how much rates have changed since you fixed. If rates have risen since you fixed, the break fee is usually minimal or zero. If rates have fallen, break fees can be substantial. Always calculate break fees before refinancing early.

Question 22

What is a "special" rate vs a "standard" rate?

Accepted Answer

Special rates (also called carded rates or advertised rates) are the discounted rates banks publicly advertise to attract new customers - these are usually their most competitive offers. Standard rates are higher baseline rates that banks use as a starting point for negotiation. Special rates are typically lower than standard rates. Special rates often require meeting certain criteria like having a minimum LVR (usually 80% or less) or holding other products with the bank.

Question 23

How often are the rates on RateMate updated?

Accepted Answer

We fetch rates from New Zealand banks daily, so you're seeing current market rates. Banks typically update their rates once a day (usually overnight), and RateMate pulls the latest data each morning. If you see a rate that looks different from a bank's website, check the timestamp on our calculator - rates may have been updated very recently. We show when rates were last refreshed to keep things transparent.

Question 24

Why do some banks show "N/A" for certain terms?

Accepted Answer

Not all banks offer every term length. For example, some smaller banks might not offer 18-month fixed terms, or might not have special rates for certain periods. We show "N/A" when a bank doesn't currently have that specific term available. This changes over time - banks add or remove products based on market conditions and their lending strategies. Focus on comparing the terms that are actually available across your preferred banks.

Question 25

Can I trust the calculations RateMate provides?

Accepted Answer

Our calculations are mathematical estimates based on standard mortgage amortisation formulas and the inputs you provide. While we strive for accuracy, actual figures from your bank may differ due to rounding methods, fee structures, and lending criteria we cannot account for. RateMate is for informational and educational purposes only - it is a calculation tool, not a guarantee. We don't provide financial advice. Always verify with your lender before making decisions.

Question 26

How do I read the bank comparison matrix?

Accepted Answer

The matrix shows all available rates from different banks side-by-side. Green arrows (↓) mean that option would save you money compared to your selected choice. Red arrows (↑) mean it would cost more. The numbers show the payment difference per period (weekly/fortnightly/monthly). Click any cell to see detailed comparison including total interest, payoff time, and break-even analysis. You can also click "View & Share Full Comparison" to generate a detailed report you can share with your partner or advisor.

Question 27

Does RateMate collect or sell my personal information?

Accepted Answer

We never sell your data to anyone. If you use the calculator without signing in, all calculations happen in your browser and nothing is stored on our servers. If you create an account (via Google sign-in), we store your name, email, and profile picture to manage your login. If you choose to save a scenario, your mortgage details are encrypted using AES-256-GCM (bank-grade encryption) before being stored. We use privacy-focused analytics (via Vercel) to understand how people use the site - this does not include any personal or financial information. See our Privacy Policy for full details.

Question 28

Can I save my comparison or come back to it later?

Accepted Answer

Yes! If you sign in with Google, you can save scenarios to your account and access them from any device. Your saved mortgage details are encrypted before being stored. You can also generate a shareable comparison URL to send to your partner or a licensed financial adviser. If you use the calculator without signing in, calculations stay in your browser and are not saved.

Question 29

What's the difference between freehold and leasehold properties?

Accepted Answer

Freehold means you own both the building and the land it sits on outright. Leasehold means you own the building but lease (rent) the land from the landowner, usually on a long-term lease (e.g., 99 years). Leasehold properties are cheaper to buy but you pay ongoing ground rent and the lease eventually expires. Banks are often more cautious about lending on leasehold properties, especially if the lease is short. If you're considering leasehold, factor in ground rent costs and check how many years are left on the lease.

Question 30

Should I get a mortgage broker or go directly to a bank?

Accepted Answer

Both have advantages. Mortgage brokers work with multiple banks, can compare offers for you, and handle much of the paperwork - often at no cost to you (they earn commission from banks). They're especially helpful for first-home buyers or complex situations. Going directly to a bank can be faster if you have a simple situation and a bank you trust. Some banks offer slightly better rates or cashback deals when you apply directly. Try both - use RateMate to compare rates first, then decide if you want broker help or to approach banks yourself.

Question 31

What credit score do I need to get a mortgage in NZ?

Accepted Answer

New Zealand doesn't have a single "credit score" like some countries - instead, banks look at your credit history from credit bureaus like Centrix or Equifax. They check for defaults, late payments, how much you owe, and your borrowing history. Generally, you need a "clean" credit history - no recent defaults, bankruptcies, or consistent late payments. If you have minor issues, you may still get approved but at higher rates or requiring a larger deposit. Check your credit report before applying (you can request it free once a year) and dispute any errors.

Question 32

How much can I borrow based on my income?

Accepted Answer

Banks typically lend 5-7 times your annual income, but it depends heavily on your expenses, debts, and deposit size. They assess your "servicing" - whether you can afford repayments even if interest rates rise. They'll look at your income (including bonuses and second jobs if regular), minus your regular expenses, debts (credit cards, car loans, student loans), and a buffer for interest rate increases. A couple earning $150,000 combined with minimal debts might borrow $700,000-$900,000. Use RateMate to model different loan amounts and see what the payments would be.

Question 33

What happens if I can't make my mortgage payments?

Accepted Answer

Contact your bank immediately if you're struggling - they have hardship programs and may offer temporary solutions like reduced payments, interest-only periods, or payment holidays. Ignoring the problem makes it worse. If you miss multiple payments, the bank can start mortgagee sale proceedings (foreclosure), where they sell your property to recover the debt. This damages your credit history severely and you may still owe money if the sale doesn't cover your debt. Early communication with your bank is crucial - they'd rather work with you than force a sale.

Question 34

Does RateMate provide financial advice?

Accepted Answer

No. RateMate is an informational and educational tool that provides mathematical calculations and factual rate comparisons. We do not make recommendations or give opinions about any particular mortgage product, bank, or loan structure for any individual person. We are not registered on the Financial Service Providers Register and do not hold a Financial Advice Provider licence. For full details, see our Compliance page. We always encourage consulting a licensed financial adviser or mortgage broker before making mortgage decisions.

Question 35

Is RateMate affiliated with any bank?

Accepted Answer

No. RateMate is completely independent. We do not receive commissions, referral fees, or any payment from banks or lenders. Our rate data is sourced from RatesAPI.nz and reflects publicly advertised rates. We are not affiliated with, endorsed by, or partnered with any financial institution.

Question 36

How accurate are the calculations?

Accepted Answer

Our calculators use standard mortgage amortisation formulas and are intended to provide reasonable estimates. However, actual loan repayments, interest charges, and break fees may differ from our estimates due to factors including your individual credit profile, bank lending criteria, specific fees and charges, and proprietary bank calculation methodologies. Always verify calculations directly with your bank or mortgage broker.

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