Get Pre-Qualified for a Mortgage | Luminate Financial Group

What is a mortgage?

A mortgage is a secured loan used to purchase property, where the property itself serves as collateral for the loan. In New Zealand, mortgages are typically offered by banks, credit unions, and non-bank lenders. The borrower makes regular payments (usually weekly, fortnightly, or monthly) that include both principal (the amount borrowed) and interest over an agreed term, usually 15-30 years.

Where does the word "mortgage" come from?

The word "mortgage" comes from Old French, combining "mort" (death) and "gage" (pledge), literally meaning "death pledge." This referred to the concept that the pledge would "die" when the debt was paid or when payment failed. The term has been used in English property law since the 14th century.

Will mortgage rates go down in New Zealand?

Based on current economic forecasts, mortgage rates in New Zealand are expected to continue declining gradually through 2025. Mortgage interest rates are likely to stabilise in 2025, following the Reserve Bank's reduction of the Official Cash Rate (OCR) from its recent peak. However, the historical, average one- and two-year mortgage rates of between 5% and 6% suggest rates may not return to the ultra-low pandemic levels.

When will mortgage rates go down in New Zealand?

Mortgage rates have already begun decreasing and are expected to continue falling gradually throughout 2025. Cuts to the five-year fixed mortgage rate occurred before rate cuts started in August 2024, and further reductions are anticipated as the Reserve Bank continues to lower the OCR in response to economic conditions.

Why are mortgage rates going up in New Zealand?

While rates have recently been declining, previous increases were driven by the Reserve Bank raising the OCR to combat inflation. When inflation was running above the target band of 1-3%, the central bank increased interest rates to cool economic activity and bring inflation under control. Global economic factors and supply chain disruptions also contributed to rate increases.

Where are mortgage rates headed in New Zealand?

Current forecasts suggest mortgage rates will continue to decline moderately through 2025, with further interest rate reductions expected. However, rates are likely to stabilize around historical averages rather than returning to the exceptionally low levels seen during the pandemic.

Who determines mortgage rates?

The Reserve Bank of New Zealand (RBNZ) sets the Official Cash Rate (OCR), which influences all other interest rates in the economy. The benchmark interest rate in New Zealand was last recorded at 3.25 percent. Individual lenders (banks and non-bank lenders) then set their own mortgage rates based on the OCR, their funding costs, risk assessment, and competitive positioning.

Who pays mortgage broker fees?

In New Zealand, mortgage brokers are typically paid by the lenders, not by the borrowers. Mortgage brokers in New Zealand do not charge fees to their clients. Their advice and support in getting your home loan approved and completed is free to you, and covered by a commission from the successful lender. Mortgage lenders or banks set their own commission rates, which might range from something like 0.6% to as high as 1.5% of the loan amount.

Which mortgage lenders accept universal credit?

Universal Credit is a UK benefit system and doesn't exist in New Zealand. In New Zealand, the equivalent would be income from Work and Income New Zealand (WINZ) benefits. Most mainstream lenders have strict policies regarding benefit income as the primary source of income for mortgage applications. Borrowers typically need stable employment income or may consider non-bank lenders with more flexible criteria.

Which mortgage lenders accept DMP (Debt Management Plans)?

Debt Management Plans are more commonly referenced in other countries. In New Zealand, borrowers with debt issues may work with budget advisory services or consider debt consolidation. Lender acceptance varies significantly based on individual circumstances, current financial position, and the time elapsed since completing any debt management arrangements. A mortgage broker can help identify suitable lenders based on specific situations.

Which mortgage lenders accept PIP (Personal Independence Payment)?

Personal Independence Payment is a UK disability benefit that doesn't exist in New Zealand. The New Zealand equivalent would be the Supported Living Payment from WINZ. Lenders evaluate all income sources, including disability benefits, on a case-by-case basis. Some lenders may accept this income when combined with other stable income sources.

Which mortgage lenders accept gifted deposits?

Most New Zealand lenders accept genuine gifts for deposits, but they have specific requirements:

The gift must be genuinely given with no expectation of repayment
A signed gift declaration is typically required
The gift giver may need to provide evidence of their financial capacity
Some lenders require the gift to come from immediate family members
Documentation showing the source and transfer of funds is essential

How does mortgage insurance work?

In New Zealand, there are several types of mortgage-related insurance:

Mortgage Protection Insurance: Covers mortgage payments if you can't work due to illness, injury, or unemployment
Life Insurance: Pays out the mortgage balance if you die
Lenders Mortgage Insurance (LMI): Required when borrowing more than 80% of property value, this protects the lender, not the borrower The cost and terms vary between providers, and it's often cheaper to arrange life and income protection insurance independently rather than through the lender.

How does mortgage interest work?

Mortgage interest in New Zealand is typically calculated daily on the outstanding loan balance and charged monthly. Most mortgages use a "table" loan structure where:

Early payments consist mainly of interest with small principal components
Later payments have larger principal portions as the balance reduces
Interest rates can be fixed (locked for 1-5 years) or floating (variable)
Extra payments directly reduce the principal, saving significant interest over the loan term

Can mortgage payments be deferred?

Yes, but this depends on your lender and circumstances. Options include:

Payment holidays: Temporary suspension of payments (typically 3-6 months)
Interest-only periods: Pay only interest, not principal
Hardship provisions: Special arrangements during financial difficulty These arrangements usually extend the loan term and increase total interest paid. They're typically granted for genuine hardship situations like job loss, illness, or major life changes.

Can mortgage interest be deducted from New Zealand taxes?

For owner-occupied homes, mortgage interest is not tax-deductible. However, for investment properties purchased before March 27, 2021, interest deductions are being phased out completely by 2025. Properties purchased after this date cannot claim interest deductions at all. The rules are complex and professional tax advice is recommended for investment property owners.

Can mortgage payments be made with a credit card?

Generally, no. New Zealand lenders typically don't accept credit card payments for mortgage payments due to the high processing fees involved. Standard payment methods include:

Direct debit from bank accounts
Automatic payments
Internet banking transfers
In-branch payments (cash or EFTPOS) Some third-party services allow credit card payments but charge significant fees that make this option financially unviable for most borrowers.

Can mortgage payments in New Zealand go up?

Yes, mortgage payments can increase for several reasons:

Floating rate mortgages: Payments fluctuate with OCR changes
Fixed rate renewals: When fixed terms expire, new rates may be higher
Interest-only periods ending: Transitioning to principal and interest payments
Rate increases: If you have a variable or floating rate mortgage
Insurance and rates increases: If these are included in your payment
Missed payments: Late fees and penalty interest can increase payment amounts

Fixed-rate mortgages provide payment certainty during the fixed term, but payments will change when the fixed period expires and new rates apply.

Getting prequalified for a mortgage in New Zealand is your first step toward homeownership, and it's simpler than many people think. Our streamlined process gives you clarity on your borrowing power without the stress of a full application.

The 4-Step Prequalification Process

1. You Share Essential Financial Details

We only need the key information that lenders actually care about:

Income Information:

Your gross annual salary or wages
Any additional regular income (overtime, bonuses, rental income)
If self-employed: your net profit from the last two years
Partner's income if applying jointly

Current Financial Commitments:

Existing loan repayments (personal loans, car finance, student loans)
Credit card limits (even if not fully used)
Regular expenses like childcare, insurance premiums
Any other ongoing financial obligations

Basic Personal Details:

Employment status and length of time in current role
Deposit amount you have available
Approximate property purchase price range
Whether you're a first-time buyer (may qualify for special schemes)

No deep dive into your life story — just the financial facts that matter to lenders.

2. We Crunch the Numbers Using Real Lending Criteria

Our sophisticated calculator doesn't just guess — it uses:

Current Market Data:

Live interest rates from major New Zealand banks
Up-to-date serviceability ratios and lending policies
Current LVR (Loan-to-Value Ratio) restrictions
Debt-to-income assessment criteria used by lenders

Comprehensive Calculations:

Your maximum borrowing capacity across different lenders
Estimated monthly, fortnightly, or weekly repayments
Impact of different deposit amounts on your borrowing power
Comparison of fixed vs floating rate scenarios

Stress Testing:

How rate increases might affect your repayments
Buffer calculations lenders use to ensure you can handle rate rises
Assessment against multiple lender criteria to give you options

3. You Get an Instant, Detailed Estimate

Your results include much more than just a number:

Borrowing Capacity Report:

Your estimated maximum loan amount
Comfortable borrowing range (typically 80-90% of maximum)
Property price range you should target
Required deposit amount for your chosen LVR

Repayment Projections:

Estimated weekly, fortnightly, and monthly payments
Breakdown of principal vs interest components
Comparison across different loan terms (25, 30 years)
Impact of making extra payments

Lender Matching:

Which types of lenders are likely to approve your application
Whether you'd qualify for low-equity lending options
If you might benefit from non-bank lender products
Potential for negotiating better rates based on your profile

See your complete borrowing picture right away — no waiting, no obligation, no hidden surprises.

4. Next Steps When You're Ready to Proceed

If you like what you see, we make the next phase seamless:

Immediate Actions Available:

Save or email your prequalification report
Compare different scenarios (larger deposit, different property prices)
Explore mortgage calculator tools for detailed planning
Access first-time buyer resources and government schemes

Professional Guidance Options:

Free consultation with an experienced mortgage adviser
Document preparation assistance for your formal application
Lender introduction to institutions that best match your profile
Rate negotiation support to secure competitive terms

Full Application Support:

Pre-completion of application forms using your prequalification data
Guidance on required documentation and how to present your case
Strategic timing advice for the best lending conditions
Ongoing support through to settlement

Why Prequalification Matters in New Zealand's Market

Competitive Advantage:In New Zealand's fast-moving property market, sellers prefer buyers who know their budget and have finance confidence. Prequalification gives you credibility when making offers.

Realistic Budgeting:Understanding your true borrowing capacity helps you focus on properties within reach, saving time and preventing disappointment from targeting unaffordable homes.

Early Problem Detection:If there are issues with your application (credit history, employment type, debt levels), prequalification identifies these early when you have time to address them.

Multiple Lender Access:Rather than approaching one bank and potentially getting declined, prequalification shows you which lenders are most likely to approve your specific situation.

What Makes Our Prequalification Different

No Impact on Credit Score:Our initial assessment doesn't require a credit check, so your credit score remains unaffected during the exploration phase.

Multiple Lender Perspectives:We assess your application against various lender criteria, not just one bank's requirements, giving you a comprehensive view of your options.

Current Market Intelligence:Our calculations reflect today's lending environment, including recent changes to lending criteria and interest rate movements.

Ongoing Updates:As your situation changes (new job, changed deposit, different property target), you can easily update your prequalification to reflect current circumstances.

Ready to discover your borrowing power? Our prequalification process takes less than 5 minutes and provides insights that could save you months in your property search.

Understanding your borrowing capacity before you start house hunting isn't just helpful — it's essential in New Zealand's competitive property market. Here's how early prequalification transforms your home buying journey from stressful guesswork into confident, strategic action.

1. Set a Realistic Budget and Maximize Your Search Efficiency

Focus Your Energy Where It Counts:Knowing your prequalification amount helps you focus your home search on properties you can actually afford — saving you time, energy, and emotional investment. Instead of falling in love with homes outside your price range, you'll target properties that align with your financial reality.

Strategic Property Selection:

Concentrate on suburbs and property types within your confirmed budget
Avoid wasting weekends at open homes for unaffordable properties
Factor in additional costs (legal fees, insurance, rates) within your overall budget
Plan for different scenarios based on deposit size and loan terms

Smarter Financial Planning:Understanding your borrowing limit helps you determine whether to increase your deposit, consider a different price range, or explore options like guarantor loans or shared ownership schemes available in New Zealand.

2. Gain Stronger Negotiating Power in Competitive Markets

Seller Confidence:When sellers and real estate agents see you're prequalified, they know you're a serious buyer with confirmed financing capacity. This credibility can give you a significant edge in New Zealand's competitive property markets, especially in Auckland, Wellington, and other high-demand areas.

Auction Advantages:

Bid with confidence knowing your absolute maximum
Avoid the embarrassment and legal complications of successful bids you can't finance
Present as a credible bidder that auctioneers and sellers take seriously
Make quick decisions without needing to "check with the bank"

Private Treaty Benefits:

Submit offers with confidence and back them up with prequalification evidence
Negotiate from a position of financial certainty
Respond quickly to vendor feedback or counter-offers
Stand out among multiple offers when sellers know you have confirmed finance

Multi-Offer Situations:In competitive scenarios, sellers often prefer offers from prequalified buyers even if they're not the highest, because they represent less risk of the sale falling through due to finance issues.

3. Accelerate Your Home Buying Process Significantly

Streamlined Applications:Prequalification speeds up your formal mortgage application when you find the right home. Much of the initial assessment work is already complete, allowing you to move quickly and confidently when you need to secure finance within tight timeframes.

Faster Settlement Periods:

Negotiate shorter finance condition periods (often 10-15 working days instead of 20)
Complete formal applications faster with pre-gathered documentation
Reduce the risk of losing your dream home to faster-moving competitors
Meet vendor requirements for quick settlements

Reduced Documentation Delays:Your mortgage adviser already understands your financial situation, meaning fewer back-and-forth requests for additional documents and faster progression through the formal approval process.

Conditional Offer Advantages:Make competitive offers with shorter finance conditions, which sellers find more attractive than longer conditional periods that tie up their property for extended periods.

4. Identify and Address Potential Issues Before They Become Problems

Early Problem Detection:You'll discover any credit, income, or employment factors that might affect your borrowing power, giving you valuable time to address them before applying formally and potentially facing rejection during a time-critical property purchase.

Credit Profile Optimization:

Identify credit score issues that need attention
Understand how existing debts impact your borrowing capacity
Learn which credit cards or loans to pay down for maximum impact
Get advice on improving your credit position before formal applications

Employment and Income Clarity:

Understand how your employment type affects lending options
Learn if self-employed income documentation needs improvement
Discover whether changing jobs might impact your application timing
Identify additional income sources that could strengthen your position

Deposit Strategy Refinement:

Determine if your current deposit is sufficient for your target property price
Understand how different deposit amounts affect your borrowing power and interest rates
Explore options for increasing your deposit through savings, gifts, or KiwiSaver withdrawal
Plan timing for optimal deposit accumulation

5. Gain Confidence and Peace of Mind Throughout Your Journey

Emotional Security:Buying a home is one of life's biggest financial decisions — knowing exactly where you stand financially gives you confidence and reduces anxiety throughout the entire process.

Informed Decision Making:

Make property viewing decisions based on facts, not guesswork
Understand the real cost of homeownership beyond just the purchase price
Plan your timeline realistically based on your actual financial position
Approach the home buying process as an informed consumer rather than a hopeful optimist

Relationship Harmony:If you're buying with a partner, prequalification provides a clear, objective foundation for discussions about budget, property types, and locations, reducing potential conflicts about unrealistic expectations.

Future Planning Confidence:Understanding your current borrowing capacity helps you plan for future changes like renovations, family expansion, or investment property purchases, giving you a clearer picture of your long-term financial options.

Additional Strategic Advantages in New Zealand's Market

First-Time Buyer Benefits:If you're eligible for first-time buyer schemes like the First Home Grant or shared ownership options, prequalification helps you understand how these benefits integrate with your overall borrowing capacity.

Investment Opportunity Recognition:Knowing your borrowing power helps you recognize opportunities for house-and-income properties or small-scale investment options that might fit within your budget.

Market Timing Decisions:With clear knowledge of your financial position, you can make strategic decisions about whether to buy now or continue saving for a larger deposit, based on market conditions and your personal circumstances.

Professional Network Access:Early prequalification often connects you with experienced mortgage advisers, real estate agents, and other professionals who can provide ongoing guidance throughout your property journey.

Don't leave your borrowing capacity to chance. Get prequalified today and transform your home buying journey from uncertainty to confidence.

Getting prequalified for a mortgage is the crucial first step in your New Zealand home buying journey. Understanding what lenders look for can significantly improve your chances of approval and help you secure better interest rates.

What is Mortgage Prequalification?

Mortgage prequalification is a preliminary assessment by lenders to determine how much you can potentially borrow for a home purchase. This process gives you a clear budget range and demonstrates to real estate agents and sellers that you're a serious buyer in New Zealand's competitive property market.

Essential Mortgage Prequalification Criteria in New Zealand

1. Income Requirements and Stability

What lenders assess: Your ability to service the loan through consistent income streams.

Employed applicants: Minimum 6-12 months employment history with current employer
Self-employed borrowers: Typically require 2+ years of tax returns and financial statements
Multiple income sources: Rental income, investments, and part-time work may be considered
Income verification: Recent payslips, employment contracts, and IRD summaries required

Tip: Lenders typically use a debt-to-income ratio of 6-7 times your annual income as a starting point.

2. Credit Score and Credit History Requirements

Minimum standards: Most New Zealand lenders prefer credit scores above 600-650.

Credit bureau checks: Lenders review your Centrix, Equifax, or illion credit report
Recent defaults: Unpaid defaults over $100 can significantly impact approval
Bankruptcy history: Must typically be discharged for 3+ years
Credit utilization: Keep credit card balances below 30% of limits

Pro tip: Check your credit report 3-6 months before applying to address any issues.

3. Existing Debt and Financial Commitments

What counts as debt:

Credit card limits (even if not used)
Personal loans and hire purchase agreements
Student loans and existing mortgages
Buy now, pay later services (Afterpay, Zip, etc.)
Vehicle finance and business loans

Key metric: Most lenders prefer total debt servicing below 35-40% of gross income.

4. Deposit Requirements Across Different Loan Types

Standard Home Loans

Minimum deposit: 20% of property value
Lower deposit options: 10% available with Lenders Mortgage Insurance (LMI)
First-time buyer benefits: May access government schemes with lower deposits

First Home Loans and Government Schemes

First Home Loan: 5% deposit for properties under regional price caps
Welcome Home Loan: 10% deposit through Kiwibank and select lenders
Shared ownership schemes: Available in some regions

5. Employment Status and Job Security

Preferred employment types:

Permanent full-time: Strongest position for approval
Fixed-term contracts: May require longer employment history
Casual/part-time: Income averaging over 2+ years typically required
Self-employed: Business operating for minimum 2 years with consistent profits

6. Property Type and Location Considerations

Property Types That May Face Restrictions:

Leasehold properties: May require higher deposits or face lending limits
Cross-lease properties: Some lenders have specific policies
Apartments under 40m²: Many lenders have size restrictions
Properties on Maori land: Specialized lending products required

Location-Based Considerations:

Remote rural areas: May face lending restrictions or require larger deposits
Flood-prone areas: Insurance requirements may affect lending decisions
High-density developments: Some lenders cap exposure to specific developments

Steps to Improve Your Prequalification Chances

Financial Preparation (3-6 months before applying):

Build your deposit: Aim for 20% to avoid LMI and access better rates
Reduce existing debt: Pay down credit cards and personal loans
Stabilize your income: Avoid job changes during the application period
Document everything: Gather payslips, tax returns, and bank statements

Application Strategy:

Work with a mortgage broker: Access to multiple lenders and specialized knowledge
Get multiple preapprovals: Compare offers from different banks
Understand unconditional vs conditional approval: Know what additional requirements may apply

Common Prequalification Mistakes to Avoid

Applying with too many lenders simultaneously: Can negatively impact credit score
Making major purchases: Avoid new debt during the application process
Changing banks: Keep existing banking relationships stable
Underestimating additional costs: Budget for legal fees, insurance, and rates

Next Steps: From Prequalification to Home Purchase

Once prequalified, you'll receive a conditional approval letter valid for 3-6 months. This document allows you to:

Make confident offers: Demonstrate serious buyer status to vendors
Set realistic budgets: Understand your true purchasing power
Move quickly: Compete effectively in fast-moving markets
Negotiate better: Strong financial position may improve purchase terms

Why Choose Professional Mortgage Advice?

New Zealand's mortgage market includes over 20 major lenders, each with unique criteria, rates, and products. A qualified mortgage adviser can:

Access wholesale rates: Often better than bank standard rates
Navigate complex situations: Self-employment, previous defaults, or unique properties
Save time and stress: Handle applications and comparisons efficiently
Provide ongoing support: From prequalification through to settlement

Ready to start your mortgage prequalification journey? Contact our experienced New Zealand mortgage brokers today for a free consultation and discover exactly how much you can borrow for your dream home.

Last updated: August 2025 | Information based on current New Zealand lending practices

A-C

Amortisation - The process of gradually paying down a mortgage through regular payments that include both principal and interest components. Over time, the interest portion decreases while the principal portion increases.

Annual Percentage Rate (APR) - The actual yearly cost of a mortgage including interest, fees, and other charges, expressed as a percentage. This provides a true comparison between different loan offers.

Application Fee - A one-time fee charged by some lenders to process your mortgage application. In New Zealand, many lenders have eliminated application fees to remain competitive.

Bridging Finance - Short-term financing used when you need to purchase a new property before selling your existing one. Common when property transactions don't align perfectly.

Building and Pest Inspection - Professional inspections of a property to identify structural issues, building code compliance, and pest problems before finalizing a purchase.

Building Consent - Official approval from your local council required before starting building work. Essential for new constructions and major renovations.

Certificate of Title - The official ownership document for a property, held electronically by Land Information New Zealand (LINZ). Shows legal ownership and any registered interests or mortgages.

Chattels - Moveable items included with a property sale such as curtains, carpets, light fittings, and appliances. These are specified in the sale and purchase agreement.

Clear Title - A property title free from legal disputes, liens, or ownership questions. Essential for a clean property purchase.

Code Compliance Certificate (CCC) - A certificate from your local council confirming that building work complies with the approved building consent and meets New Zealand Building Code requirements.

Conditional Sale - A property sale subject to specific conditions being met (such as finance approval, building inspections, or LIM report) within agreed timeframes.

Construction Loan - Specialized financing for building new homes, typically released in stages as construction progresses rather than as a lump sum.

Credit Score - A number between 0 and 1,000 indicating your creditworthiness based on your history of managing debt and paying bills. A score above 500 is generally considered good in New Zealand.

D-H

Debt Consolidation - Combining multiple debts into a single mortgage or loan, often at a lower interest rate. Popular option when refinancing in New Zealand.

Debt-to-Income Ratio (DTI) - Your total monthly debt payments divided by your gross monthly income, expressed as a percentage. New Zealand lenders typically prefer ratios below 40%.

Deposit - The upfront payment you make when purchasing a property, typically 10-20% of the property value. A larger deposit results in a lower LVR and better lending terms.

Discharge - The formal process of removing a mortgage from a property title once the loan is fully repaid.

Early Repayment - Making additional payments toward your mortgage principal to reduce the loan balance faster and save on interest costs.

Equity - The difference between your property's current market value and the outstanding mortgage balance. This represents your ownership stake in the property.

Fixed Rate - An interest rate that remains constant for a specified period (typically 1-5 years in New Zealand). Provides payment certainty but may miss out on rate decreases.

Floating Rate - A variable interest rate that fluctuates with market conditions and the Official Cash Rate (OCR). Also known as variable rate.

Guarantor - Someone who agrees to be legally responsible for your mortgage if you default on payments. Often a family member who helps first-time buyers qualify for loans.

I-L

Interest-Only Loan - A loan structure where you only pay interest for a specified period, with no principal repayment. The principal amount remains unchanged during this period.

Land Information Memorandum (LIM) - A report from your local council containing information about a property including rates, consents, known hazards, and council records.

Land Transfer - The legal process of transferring property ownership from seller to buyer, registered through Land Information New Zealand (LINZ).

Lenders Mortgage Insurance (LMI) - Insurance required by lenders when you borrow more than 80% of a property's value. Protects the lender (not you) if you default on the loan.

Line of Credit - A revolving credit facility secured against your property, allowing you to borrow and repay funds as needed up to an agreed limit.

Loan Term -The length of time over which you'll repay your mortgage, typically 15-30 years in New Zealand. Longer terms mean lower payments but more total interest.

Loan-to-Value Ratio (LVR) - The percentage of a property's value that you're borrowing. Calculated by dividing the loan amount by the property value. For example, borrowing $400,000 on a $500,000 property equals an 80% LVR.

Low Equity Loan - A home loan with an LVR above 80%, requiring either a guarantor or lenders mortgage insurance. Subject to Reserve Bank restrictions.

M-P

Mortgage - A secured loan for purchasing property where the property serves as collateral. If you default, the lender can sell the property to recover the debt.

Mortgage Broker - A licensed professional who helps you find and secure mortgage financing. In New Zealand, brokers are typically paid by lenders, not borrowers.

Mortgage Holiday - A temporary suspension of mortgage payments, usually granted during financial hardship. Interest typically continues to accrue during this period.

Mortgage Protection Insurance - Insurance that covers your mortgage payments if you're unable to work due to illness, injury, or unemployment.

Negative Equity - When your property's market value is less than your outstanding mortgage balance. Also known as being "underwater" on your mortgage.

Non-Bank Lender - Financial institutions other than registered banks that provide mortgage lending, such as credit unions, building societies, and specialist lenders.

Official Cash Rate (OCR) - The interest rate set by the Reserve Bank of New Zealand that influences all other interest rates in the economy, including mortgage rates.

Offset Account - A savings account linked to your mortgage where the balance reduces the amount of interest charged on your home loan.

Pre-Approval - Conditional approval for a mortgage based on your financial situation, giving you confidence when house hunting and negotiating.

Principal - The original amount borrowed, or the remaining balance of your loan excluding interest and fees.

Principal and Interest (P&I) - The most common repayment structure where each payment includes both principal reduction and interest charges.

Q-T

Redraw Facility - A feature allowing you to access additional payments you've made above the minimum required amount.

Refinancing - Replacing your existing mortgage with a new one, often to secure better interest rates, access equity, or consolidate debt.

Registered Valuation - An official property valuation conducted by a qualified valuer, required by lenders to determine lending amounts.

Repayment Frequency - How often you make mortgage payments - weekly, fortnightly, or monthly. More frequent payments can reduce total interest costs.

Revolving Credit - A mortgage structure that works like a large overdraft, where you can deposit income to reduce interest and redraw funds as needed.

Settlement - The final stage of property purchase where ownership transfers, keys are handed over, and the mortgage funds are released.

Split Rate - A mortgage structure where you divide your loan between different interest rate types (e.g., part fixed, part floating) to balance security and flexibility.

Stamp Duty - A government tax on property transactions. Note: New Zealand does not have stamp duty, unlike Australia.

Switched Rate - Moving from one interest rate type to another (e.g., fixed to floating) during your loan term.

Table Loan - The most common mortgage type in New Zealand where you pay both principal and interest from the start, with payments structured to fully repay the loan over the agreed term.

U-Z

Unconditional Sale - A property sale where all conditions have been satisfied or waived, making the contract legally binding.

Valuation - An assessment of a property's market value, typically required by lenders before approving a mortgage.

Variable Rate - See Floating Rate - an interest rate that changes with market conditions.

Vendor Finance - When the property seller provides financing directly to the buyer instead of the buyer obtaining a traditional mortgage.

WINZ - Work and Income New Zealand - the government agency that provides financial assistance and employment services. Income from WINZ benefits may be considered by some lenders.

This glossary covers terms commonly used in the New Zealand mortgage and property market as of 2025. Mortgage products and regulations may vary between lenders and can change over time. Always seek current advice from qualified professionals.

See if You CouldQualify for a Home Loan- in Minutes

Frequently Asked Mortgage Questions

Basic Mortgage Information

Interest Rates & Market Trends

Mortgage Broker Information

Lender Acceptance Criteria

Mortgage Mechanics

How the Mortgage Prequalification Process Works in New Zealand