The ultimate guide to mortgages and home loans in New Zealand (2025 edition)

A mortgage is a type of loan specifically used to buy property. In simple terms, it’s an agreement between you and a lender -usually a bank - where they lend you the money to buy a home, and in return, you agree to pay it back over time with interest. The property itself acts as security for the loan, meaning if you can’t repay it, the lender has the right to sell the home to recover their money.

Most mortgages in New Zealand are paid off over 25–30 years through regular repayments, which cover both the original loan amount (called the principal) and the interest charged by the lender. The exact structure of your repayments depends on the type of loan you choose, your interest rate, and how much you borrow.

Lenders will assess your financial situation, including income, expenses, debts, and credit history.

Be prepared to provide:

• Proof of income (e.g., payslips)
• Proof of deposit
• Bank statements (3 months' worth)
• Identification documents
• Details of any existing debts

A deposit is the initial lump sum you contribute toward the purchase of a property. It's your personal stake in the home, while the remaining balance is covered by your home loan from a lender. The size of your deposit is one of the most significant factors in securing a mortgage and can influence your interest rate and loan terms.

In New Zealand, the standard deposit is 20% of the property's value. This means that if you're buying a home for $800,000, you'll need a deposit of $160,000. This is directly related to your Loan-to-Value Ratio (LVR), the percentage of the property's value that is covered by your loan. A 20% deposit means you have an 80% LVR, which is a key benchmark for lenders as it represents a lower risk.

Your deposit doesn't have to be a single source. It can be a combination of several funds, including:

• Personal savings: Money you have saved in bank accounts or term deposits.
• KiwiSaver: If you've been a member for at least three years, you may be eligible to withdraw a portion of your KiwiSaver savings to use as a deposit for your first home.
• Gifts from family: It's common for family members to gift money to help with a deposit. Lenders will usually require a signed declaration stating that the money is a non-repayable gift.
• Other investments: Funds from shares or other investments can also be used.

While 20% is the standard, it's not the only option. New Zealand banks have a certain allowance for high-LVR loans, and there are government-backed schemes to help first-home buyers with smaller deposits.

Read about low deposit options for first-home buyers. 

How much you can borrow depends on a combination of factors - your income, expenses, debts, deposit size, and credit history all play a part.

While lenders use a debt-to-income ratio to assess affordability, as a general rule, most New Zealand banks will lend up to five times your gross annual income for an owner-occupied home. So, if your household earns $120,000 a year before tax, you could potentially borrow around $600,000 - assuming you meet the other lending criteria.

• Pros: The process can feel more straightforward if you already bank with them. They may offer special deals or loyalty bonuses if you bundle other products like credit cards or insurance.
• Cons: The bank's adviser can only offer their own loan products, which means you might miss out on a better deal available from another lender.

Learn more about using a mortgage broker vs a bank.

The Official Cash Rate (OCR) is a key tool used by the Reserve Bank of New Zealand (RBNZ) to help steer the country’s economy. It influences the cost of borrowing and the returns on savings, making it a major factor in how interest rates are set across the board, including mortgage rates.

The RBNZ's Monetary Policy Committee (MPC) reviews the OCR about seven times a year. They decide whether to raise, lower, or keep it the same based on the state of the economy.

When the OCR goes up, borrowing becomes more expensive. Banks usually increase their own interest rates, meaning mortgage repayments become higher. This is often done to cool down inflation or slow economic growth.

When the OCR goes down, borrowing becomes cheaper. Banks lower their interest rates, which can reduce mortgage repayments and encourage more spending and investment in the economy.

Simply put, an interest rate is the cost of borrowing money. When you take out a loan, you pay interest on the amount you've borrowed. It's a percentage of the loan and determines how much extra you'll repay over the life of the loan.

When you get a mortgage in New Zealand, you'll choose between a fixed or floating (variable) interest rate.

• Fixed rates stay the same for a set time. This gives you certainty and predictable repayments, which is great for budgeting.
• Floating rates can change with the market. They offer more flexibility and a chance to pay off your loan faster, but with less predictability.

Many Kiwis choose a split loan, which lets you combine both a fixed and floating rate to balance stability and flexibility.

Choosing the right home loan is crucial to align with your financial goals and lifestyle. Here's a breakdown of the common mortgage types available in New Zealand:

• Table Loans: The most common type, with regular repayments covering both principal and interest.
• Revolving Credit Loans: A flexible loan linked to your everyday account, allowing you to reduce interest by keeping your balance low.
• Offset Loans: Your savings offset the loan balance, reducing the interest charged.
• Reducing Balance Loans: Repayments decrease over time as the interest is calculated on the remaining principal.
• Interest-Only Loans: You pay only the interest for a set period, with principal repayments starting later.

Learn more about the types of home loans available in New Zealand.

Here are some quick-fire answers to your top questions.

What is the minimum deposit needed to buy a house in New Zealand?

Most banks require a 20% deposit, but some first-home buyers may qualify for a low-deposit home loan with as little as 5%—especially through Kāinga Ora's First Home Loan scheme. However, low-deposit loans may come with extra conditions or higher interest rates.

Can I use my KiwiSaver to buy a house?

Yes, if you’ve been contributing to KiwiSaver for at least three years, you may be eligible to withdraw most of your savings to use as part of your deposit. You might also qualify for the First Home Grant, which can add up to $10,000 per person towards your first home.

How long does it take to get mortgage pre-approval in NZ?

Pre-approval usually takes anywhere from 3 to 10 working days, depending on the lender and how quickly you provide your documents. Working with a mortgage broker can often speed up the process.

How does the Official Cash Rate (OCR) affect my mortgage?

The OCR is set by the Reserve Bank of New Zealand and directly impacts interest rates on home loans. When the OCR rises, mortgage interest rates often increase too. When it falls, lenders may reduce rates, making borrowing cheaper.

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

A fixed interest rate stays the same for a set period (e.g. 1–3 years), offering predictable repayments. A floating rate can change at any time, depending on the market. Floating loans are more flexible and may allow extra repayments without penalties.

What is a mortgage broker, and should I use one?

A mortgage broker is a licensed professional who helps you find and apply for a suitable home loan. They work with a range of lenders and often don’t charge a fee, as they're paid by the lender. Brokers can simplify the process and help you secure better rates or terms.

Can I get a mortgage with bad credit in New Zealand?

It’s possible, but harder. You may need to go through a non-bank lender, which may charge higher interest rates or require a larger deposit. It’s a good idea to work with a mortgage adviser who has experience helping borrowers with poor credit.

How much can I borrow for a home loan in NZ?

Most lenders will offer up to five times your gross annual income, depending on your financial situation. They’ll also consider your deposit, expenses, and other debts. You can use an online borrowing calculator for an estimate.

How do I choose the best type of mortgage?

The right loan depends on your goals, income, lifestyle, and how long you plan to stay in the home. A mortgage broker or adviser can help you compare loan types (e.g. table loans, revolving credit, offset, or interest-only) and find the one that suits you best.