The Three Main Types of Mortgage Loans in New Zealand

Buying a home is one of the biggest financial commitments most New Zealanders will ever make. Choosing the right mortgage structure can have a huge impact on how manageable your repayments are – and how much interest you’ll pay over time.

At The Mortgage Hub, led by former All Black and now qualified financial adviser Mils Muliaina, we guide first-home buyers, investors, and families through these choices every day.

Here are the three main types of home loans you’ll encounter in New Zealand:

1. Fixed Rate Loan

A fixed loan means your interest rate is locked in for a set period, usually between one and five years.

• How it works: If you fix at 6% for two years, your repayments won’t change, even if market rates rise or fall.
• Why people choose it: Certainty. Fixed loans make budgeting easier and protect you from sudden rate hikes.
• What to consider: Breaking a fixed loan early often comes with penalty fees.

2. Floating (Variable) Loan

Floating loans move with the market, so your interest rate can rise or fall at any time.

• How it works: The rate is usually higher than fixed, but you can repay lump sums whenever you like. If you get a bonus at work or sell an asset, you can put that money directly on the mortgage and reduce your interest costs.
• Why people choose it: Flexibility. Great if you want to make extra payments or keep your options open.
• What to consider: Because rates fluctuate, repayments can be less predictable. Floating is generally not recommended as your long-term structure.

3. Bridging Loan

A bridging loan is designed for buyers who need to settle on a new home before selling their current one.

• How it works: If your new property settles next month but your old house won’t sell until later, a bridging loan covers the gap. This ensures you can move forward without being stuck waiting for sale proceeds.
• Why people choose it: It keeps momentum in the buying process, especially in competitive markets.
• What to consider: Bridging loans are short-term and can carry higher costs, so planning the timing of your sale is important.

Choosing the Right Fit

Each loan type has advantages and trade-offs. The right structure often ends up being a mix – part fixed for stability, part floating for flexibility, and bridging if you’re in between properties.

At The Mortgage Hub, our role is to tailor these options to your situation so you can move forward with confidence. Whether you’re buying your first home, refinancing, or adding to your portfolio, good advice can save you both money and stress.

Watch this video to learn more about the 3 main types of mortgage loans.

Thinking about your next move? 

Reach out to The Mortgage Hub and have a chat with Mils and the team. The right loan structure could make all the difference in achieving your financial goals.