Fixed vs Floating Home Loans
Fixed Rate Loans
- Rate is locked for a set period (1–5 years typically)
- Your repayments stay the same regardless of market changes
- Pros: Predictable budgeting, protection from rate hikes
- Cons: Break fees if you need to change terms early, can't benefit from rate drops
Floating (Variable) Rate Loans
- Rate changes as the OCR (Official Cash Rate) changes
- Pros: Flexible — no break fees, can make extra repayments without penalty, often has an offset account
- Cons: Payments can rise unexpectedly, usually higher interest rate than fixed
Major NZ Banks Compared
| Bank | Typical 1yr Fixed | Typical Floating | Min Deposit | Special Features |
|---|---|---|---|---|
| ANZ | Competitive | Higher | 5% (with LVR) | ANZ Blueprint to Build |
| ASB | Competitive | Higher | 5% (with LVR) | ASB True Rewards |
| BNZ | Competitive | Higher | 5% (with LVR) | TotalMoney offset account |
| Westpac | Competitive | Higher | 5% (with LVR) | Choice floating/fixed |
| Kiwibank | Competitive | Moderate | 5% (with LVR) | NZ-owned, good service |
Mortgage Brokers vs Banks Direct
Using a Mortgage Broker
- Free to use (paid commission by banks)
- Access to multiple lenders including non-bank
- Help with paperwork and pre-approval
- Good for complex situations (low deposit, self-employed)
Going Direct to a Bank
- You deal directly with the bank's mobile lender
- Can sometimes get loyalty discounts
- Fewer options — only that bank's products
Choosing Your Loan Structure
A common strategy is to split your loan: fix part for stability (e.g., 60–80% fixed for 1–3 years) and keep part floating (e.g., 20–40%) for flexibility and extra repayments. This gives you the best of both worlds.
Pre-Approval vs Full Approval
- Pre-approval: Bank says "in principle" how much they'll lend — valid ~3 months
- Full approval: Confirmed after the bank assesses the specific property
- Always get pre-approval before you start house-hunting seriously