How home loans work

10 October 2014 / Published in Your Money

Most New Zealanders dream of owning their own home. Saving for the deposit is usually the first part, and then once you have found the home of your dreams, it’s important to choose a home loan structure that suits you best. Here are some tips to help you decide what sort of home loan will suit you best and achieve your dream of owning your own home.


Like any loan, your home loan needs to be paid back within a set time period and at an agreed interest rate. Most home loans give you 25 years to repay them. A longer term makes the repayments lower, but it also means the total interest you pay over time could be more.


You can choose between a fixed or variable interest rate.

  • A fixed interest rate locks in a rate for a particular time period which means you know exactly what your regular repayments will be.
  • A variable interest rate changes according to market conditions so it can go up, but it can also go down.

For more information about the different types of interest rates for home loans, see ‘Should you fix or float or both?’


When considering a home loan, it’s important to do the sums first and ensure that you don’t over commit. A great way to get a feel for the numbers is with an online home loan calculator. It gives you an indication of how much your home loan repayments could be for the house you want to buy.

A home loan is a big commitment so take the time to make sure you’re ready for it.

If you’re thinking about saving for your first home, check out our tips on how to get started and find out how you could use your KiwiSaver to get into your first home.

To see how we can help, take a look at our website or give us a call on 0800 100 600.  

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How home loans work – learn about repayments & interest
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ASB’s lending criteria, terms and conditions apply. This material is for information purposes only, is intended to be of a general nature and does not take into account your financial situation or goals.  It is recommended you seek advice from a financial adviser which takes into account your individual circumstances before you acquire a financial product.


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