Interest rates are the single biggest factor in the cost of your mortgage. In New Zealand, you generally have two main choices: fixing your rate for a set period or letting it float. At AdviseNow, we help you weigh the pros and cons of each to find the right balance for your budget.
Fixed Mortgage Rates: Certainty and Stability
A fixed rate means your interest rate and repayments stay the same for a set term (usually 6 months to 5 years). This is great for budgeting because you know exactly what’s going out each fortnight or month. However, if rates drop, you’re stuck on the higher rate until your term ends.
Floating Mortgage Rates: Flexibility and Freedom
Floating (or variable) rates move up and down with the market. The main advantage is flexibility—you can usually make extra repayments or pay off the loan in full without penalties. The downside? If interest rates rise, so do your repayments.
The ‘Split’ Strategy
Many Kiwis choose to split their mortgage—fixing a portion for stability and keeping a portion floating for flexibility. This can be a powerful way to manage risk while still being able to pay down debt faster.
Key Takeaways
- Fixed rates offer budget certainty.
- Floating rates offer repayment flexibility.
- A split mortgage can provide the best of both worlds.
Disclaimer: This information is general in nature and does not constitute personalised financial advice.
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