Five things to consider each year to manage your mortgage

Reviewing your home loan regularly can help you find ways to pay it off faster. Get started with these useful tips.

4 minute read

When you think about your mortgage as a 30-year commitment, it’s easy to just set it and forget it. To make sure you’re paying your home loan off as quickly and affordably as possible, it’s important to review your home loan regularly.

BNZ Home Loan Partner, Alisha Bundock, shares the top five things you could consider for your home loan every year.

1. Think about your home loan in relation to your life goals

Take a moment to think about where you see yourself in the next year or two, as well as your long-term ambitions.

You might consider:

• whether you can pay off your home loan faster
• making improvements or renovating your home
• starting a family and possibly changing from two incomes to one
• downsizing to a smaller home
• whether you’re looking to buy an investment property or a holiday home
• whether you want to have your home loan paid off before you retire.

These factors can all affect the way you think about your mortgage. “My suggestion is to consider your goals and then try to structure your home loan to suit your plans”, says Alisha.

2. Check how long is left on your fixed rate period

Alisha says one of the best times to review your home loan is near the end of your fixed rate period. “Not only is this a timely reminder to check in on your financial situation”, she says, “but you’ll also have more flexibility compared to trying to make changes in the middle of a fixed rate period”.

Keep tabs on when your fixed rate is due to roll over so you can give yourself plenty of time to explore the best way to structure your loan. Plus, if you plan to sell your home, consider when the best time to do this is, as if you decide to sell during your fixed period, this could attract a break cost. 

3. Review your repayments

Consider whether you can afford to increase your home loan repayments, keeping in mind that in some instances early repayment fees may apply.

Possible options might be:

• rounding up (for example, pay $3,370 instead of $3,362 per month)
• paying every two weeks instead of every calendar month, effectively making two extra fortnightly repayments per year (whether this is doable depends on your bank, so you’ll need to check with your mortgage provider)
• making a lump sum payment (just be sure to check your loan account rules and fees around these types of payments first).

“Even small changes can make a big difference over the life of your home loan”, says Alisha. “For example, an extra $34 a fortnight on a 30-year loan could shave two years and a little over $57,000 in interest off a $500,000 home loan with an interest rate of 7.00% p.a”. *

To help make these decisions easier to visualise, BNZ customers can use BNZ MyProperty – a home loan calculator within BNZ’s personal Internet Banking. It uses your actual BNZ home loan data to show you how making changes to your repayments, a lump sum payment, or different interest rates may affect your home loan and mortgage free date. 

4. Give your loan structure a check-up

Review whether your loan structure is still working well.

You could:

• put a portion on a floating rate, so you can make more lump sum payments
• split your home loan over different fixed rate periods and interest rates - for example, into a 1 year fixed rate period, a 2 year fixed rate period, and a variable rate - to give you certainty of payments on the fixed portions, and flexibility on the variable
• offset with a BNZ TotalMoney home loan.

BNZ TotalMoney lets you offset part of your loan against your savings, using money you’ve got in the bank to save on interest. “Say you’ve got a TotalMoney home loan of $500,000 and you’ve got $100,000 in your TotalMoney accounts; bills, spending, and savings. You’ll only pay interest on the difference,  $400,000”, explains Alisha. “Your minimum repayments would stay the same, but a larger amount will get paid off your principal, so you’ll be mortgage free sooner”. 

Even better, TotalMoney allows you to link multiple accounts and use money in yours, your partner’s, a parent, or child’s account, to offset all, or part of your home loan meaning you’ll pay less interest overall.

To find out how much a BNZ TotalMoney home loan could save you, use our TotalMoney calculator.

5. Request a free banking review

Having a review is an ideal way for us to make sure your banking is working based on what’s important to you now and in the future. “I’d encourage everyone to come in to a branch or give us a call for a free banking review”, says Alisha. “It’s a great chance to review your current position and plan for the future”. A review is free and available to everyone, not just BNZ customers. If you’re interested, you can make a request online and we'll contact you.

Just like our lives, a mortgage doesn’t work in a straight line. Nothing is ever set entirely in stone - so set yourself a yearly reminder to check in on your home loan. If any questions come up, talk to one of our Home Loan Partners for expert advice on buying, refinancing, or building your home or investment property.

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This material is for general information purposes only and does not constitute, and is not intended as, personalised financial advice or as a replacement for legal advice. BNZ strongly recommends you seek advice specific to your personal financial or legal situation from a qualified adviser. Neither BNZ nor any person involved in the material accepts any liability for any direct or indirect loss or damage arising out of the use of, or reliance on, all or any part of the content. 

*Based on a loan amount of $500,000 on a 30-year term with a floating interest rate of 7% p.a. and fortnightly repayments of $1,529.91. These figures are calculated based on a $34 increase to the fortnightly repayments, repayments being made on time, and the current interest rate staying the same for the term of the loan (which in reality is likely to change over time). Time saved is rounded down to the nearest month.

All home loans are subject to lending criteria (including minimum equity requirements), term and fees apply. Read our full home loans terms and conditions.

Account opening and lending criteria, terms and fees apply. BNZ standard terms and conditions apply to all BNZ transaction and savings accounts. Read full TotalMoney terms and conditions. Details of our fees can be found in our Fees Guide. Rates and fees are subject to change.

¹ Available for most BNZ home loans. You may not always have the option to re-fix your loan online or on the BNZ app. Speak to us and we can talk through your options. Early repayment charges and a rate lock break fee may apply. Internet access required for online banking and the BNZ app. BNZ Internet Banking Terms and conditions apply. Maintenance sometimes required.