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Finding a great mortgage doesn’t have to be hard, and Finder helps you easily compare mortgage rates from lenders. You can apply directly with the lender or contact a mortgage broker for expert help.
We regularly update all of our mortgage rates from lenders across New Zealand, including banks, non-banks and credit unions.
Interest rates indicated below are per annum (p.a.).
A mortgage is a type of loan that you use to purchase a home or investment property. You make a legally binding agreement with a bank or other financial institution that lends you money over a period of up to 30 years in exchange for charging interest at a fixed or floating (variable) rate.
There are different types of mortgages including a table loan, revolving credit loan, offset loan, reducing loan or interest-only loan. Each has its pros and cons, with varying features and repayment structures to suit the needs of different individuals or investors.
A deposit is required before you can take out a mortgage. Typically, your deposit should be 20% of the value of the home you want to purchase, but it’s possible to obtain a mortgage with 5% or 10% depending on the circumstances and the lender. Some major banks give more favourable interest rates to borrowers who have at least a 20% deposit.
Once you have bought a property, it is used as security against your mortgage and is technically owned by the bank until you pay off your loan. If you default on your payments, the lender has the legal right to take ownership to recoup their loss.
The interest rate is the most important part of the loan because it affects your repayments.
However, if you want to compare mortgages, there are also a few more questions to answer first:
If you’re borrowing money to buy a home to live in, you need an owner-occupier mortgage. If you’re buying an investment property, you’re looking for an investment loan.
Investor mortgages have slightly higher rates but are otherwise more or less the same. It’s the purpose behind the mortgage (what you’re using it for) that matters.
What if you already have a mortgage but want to switch to a better deal? This makes you a refinancer, and most loans are available for refinancing. They’re not separate, specialised products.
If you already have a mortgage but want to switch to a new one with a new lender there’s nothing to stop you. However, you do need to apply all over again with the new lender. It’s a bit of work but switching to a lower rate can save you a lot of money.
It’s important to decide whether you want a fixed or floating interest rate. Floating rates have more flexibility but your rate can go up (or down) at any time.
Fixed rates let you budget your repayments more accurately because you know your repayments in advance. However, they’re less flexible. Plus, if you want to refinance a fixed-rate loan during its set period there is a fixed loan break cost.
Another decision you have to make is your loan’s repayment type. Principal-and-interest mortgages require you to pay off the money you borrow plus interest at the same time.
Interest-only mortgages offer you an early period where you only pay the interest, not the loan amount itself, which makes repayments lower early on, but they end up being higher later. It’s a popular option for savvy investors, but be aware that it isn’t the best option for everyone.
A good mortgage comparison starts with a careful look at interest rates, as it’s the key component. The lower the rate, the lower your repayments are. If you’re borrowing a lot of money, even a small difference in the rate can add hundreds or even thousands of dollars to your repayments. Here’s the difference in repayments between a 3.50% and a 3.00% interest rate (on otherwise identical loans, with 20% deposits and principal-and-interest repayments).
| Interest rate | 3.50% | 3.00% |
|---|---|---|
| Loan amount | $400,000 | $400,000 |
| Loan term | 30 years | 30 years |
| Monthly repayments | $1,796 | $1,686 |
| Savings (monthly) | N/A | $110 cheaper |
| Savings (yearly) | N/A | $1,320 cheaper |
| Savings (life of loan) | N/A | $39,600 cheaper |
Over 30 years, that little 0.5% difference in the interest rate could save a borrower an enormous $39,600 in interest charges.
Beyond the interest rate, comparing mortgages means looking at fees and the various features they come with. A loan with the right features gives you more control over your money and unlocks new ways to use your mortgage to your advantage.
The comparison rate does what its name suggests: it helps you compare a mortgage. This rate is a home loan’s interest rate, plus the cost of fees taken into consideration. It is a legal requirement to be displayed on all loans, but it’s only a hypothetical calculation.
Not every mortgage comes with the same features. However, here are the standard, useful ones:
Loan-to-value ratio (or LVR) is another way of saying minimum deposit. Most loans have a maximum LVR of 80%, meaning you need a 20% deposit.
However, many loans also have a maximum insured LVR of up to 95%, which means you can get the loan with a smaller deposit. However, you need to pay lenders mortgage insurance (LMI) when your deposit is under 20%.
It’s hard to go through the mortgage process without paying some fees. You should always factor fees into your home loan comparison.
Examples of home loan fees include:
The amount that a lender offers you depends on multiple factors:
To maximise your chances of having a mortgage approved, or borrowing more, you should check your credit score in advance, minimise your spending in the months before applying for a loan and focus on paying down any outstanding credit card or personal loan debts.
The mortgage application process seems complex and scary. However, once you break it down it’s not that hard. Preparation is key:
If you provide all the required information, your lender can approve your loan in 2 – 3 business days, while some lenders even advertise that they can provide a decision in as little as 60 minutes. Remember that the more complicated an application, the longer approval can take.
Pre-approval means your lender “conditionally” approves you for a specific mortgage amount. It takes into account your income, debts and liabilities when deciding this. It’s usually extended for a few months, allowing you to look for a property with a bit more confidence. It’s important to note that pre-approval conditions can differ depending on the lender.
Your lender wants to work out whether or not you can afford a loan. They ask for a lot of information from you, including:
Buying a house is among the biggest investments most of us make. Set yourself up for long-term success by narrowing down the type of mortgage that fits your needs, budget and property. A strong rate and term can provide peace of mind and save you thousands over the life of your mortgage.
The words “under contract” don’t necessarily mean that a property sale is a done deal. Find out more about this term here.
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