Paying your mortgage: a few years in

Find out how to make the most of the early years of your mortgage life cycle.

6 minute read

Hitting your stride

As life with a mortgage becomes second nature, your confidence will start to grow. You’ll likely have a firmer grasp of your budget and a better handle on your finances. You might even see a satisfying dent in your principal. But when it comes to your mortgage, it’s important not to just set it and forget it. Check in regularly to make sure everything’s running as efficiently and effectively as possible.

Review your mortgage structure

A few years in, it’s time to start thinking about the structure of your mortgage and whether it’s still the right one for you. You could consider:

• floating a portion of your mortgage so you can make lump sum payments penalty-free
• giving yourself a little more flexibility by splitting your mortgage – for example across a one-year term, a two-year term, and a variable rate
• off-setting some or all of your mortgage with TotalMoney, so you can use your savings to save interest on your home loan.

Think about your life stage

Throughout your mortgage, it’s useful to check in and take stock of where you’re at in life – and more importantly, where you see yourself in the next few years. Are you ready to purchase an investment property, or a bach? Are you looking to have children soon, thinking about buying a bigger home? Consider your life goals, and make sure your mortgage is structured to suit.

Check your repayments

Even a small repayment increase could have a big impact. For example, say you had a $400,000 loan with an interest rate of 4.35%. Increasing your $1000 fortnightly payments to just $1050 could shave more than two years off your mortgage, and save you almost $25,000 in interest. Use our repayment calculator to figure out how much an extra $100 or $200 a month could save you. Make sure to check whether you will be charged an early repayment charge (ERC) and consider that when increasing your repayments.  

Make lump sum payments

If you receive an unexpected amount of money – like an inheritance, or a tax refund – you could consider making a lump sum payment. These go straight towards paying off the principal, which can drastically reduce the amount of interest you’ll pay across your mortgage’s life cycle. Some fixed rate mortgages let you make extra payments of up to 5% of your loan per year, while on a floating mortgage you can make as many as you like. Other loan types allow you to make a lump sum payment but you may incur an ERC, so it pays to do your homework first.

Get a 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. So take a moment to book in a Banking Review. A quick chat might give you the insight you need to reach the end of your mortgage’s lifecycle sooner.

Next, it’s time to consider the twilight years of your mortgage.

To talk more about your mortgage, get in touch with us by visiting a branch or contacting us on 0800 275 269.

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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.

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