Mortgage

A mortgage is the most common way New Zealanders finance a property purchase. The bank lends you the money to buy the property and registers a mortgage interest on the certificate of title. This means the bank has a legal claim on the property — if you stop making repayments, the bank can ultimately sell the property to recover its money (known as a mortgagee sale).

In New Zealand, most banks require a deposit of at least 20% of the purchase price for owner-occupiers. First-home buyers may qualify for a lower deposit (as low as 5-10%) under certain conditions, including through the Kainga Ora First Home Loan scheme.

Mortgages come in various structures: fixed rate (interest rate locked for a set period), floating rate (rate can change at any time), and split structures (part fixed, part floating). Most New Zealand borrowers use a mix of fixed-rate terms to manage interest rate risk.

Getting pre-approval from your bank before you start house hunting is strongly recommended. Pre-approval gives you confidence about your budget and strengthens your offer in the eyes of sellers.

Be aware that pre-approval is not the same as final approval. The bank will still need to assess the specific property (including a valuation) before confirming finance. Include a finance condition in your sale and purchase agreement to protect yourself if the bank declines the specific property.

Talk to your bank or a mortgage broker early in the buying process. Get pre-approved so you know your budget. When you find a property, your bank will assess it (and may require a registered valuation). Your lawyer will manage the mortgage documentation at settlement, including registering the bank's interest on the title.