How-To Guide: Mortgage Strategies That Work

With mortgage rates easing and a little more flexibility returning to the housing market, now’s a smart time to revisit your home loan strategy.

Before making any changes, we’ve looked into what leading New Zealand banks and trusted money experts are saying about how to reduce your mortgage faster and we’ve brought together their top insights into one simple guide.

Please note: This article is for general information only and is not financial advice. If you’re considering making changes to your mortgage, talk with a licensed mortgage adviser or financial coach first.

Expert-Sourced Guidance

To bring you reliable, evidence-based information, we’ve drawn insights from Sorted, MoneyHub, Enable.me, and New Zealand’s major banks - ANZ, BNZ, Kiwibank, and Westpac.

Our goal is to help members make informed, confident financial decisions - not to provide personalised advice.

1. Pay a Little Extra - Even Small Top-Ups Matter

Almost every major NZ bank emphasises this as the number-one strategy.
Kiwibank, BNZ and ANZ all note that paying just a little extra on your regular repayments can dramatically shorten your loan term and reduce total interest.

• BNZ’s example: On a $500 000 loan at 6 %, adding just $50 per fortnight could save more than $57 000 in interest and cut the loan term by almost three years.
• Kiwibank’s take: Even if you can’t manage large lump sums, regular micro-payments - like rounding up your repayment to the nearest $10 - still chip away at your principal faster.

The key is consistency. Small, automatic top-ups done early in the loan’s life have the biggest long-term impact.

Watch-out: Fixed-rate loans often have annual caps (for example, 5 % of the balance per year) before break fees apply. Always check your lender’s limits first.

2. Keep Payments the Same When Rates Fall

When your rate drops or you refix at a lower rate, many borrowers feel the relief and reduce their regular payment. But experts at ANZ, Enable.me and Sorted all agree: keep your payments the same.

You’re already used to paying that amount, and the difference now goes directly toward principal.

• ANZ’s calculator shows that maintaining your higher payment after a 1 % rate drop can shave up to seven years off a typical 30-year loan.
• Enable.me coaches call this the “hidden advantage” of falling rates — using them to accelerate progress instead of resetting your budget.

Tip: Before refixing, ask your lender to lock in your current repayment level.

3. Pay More Often

Switching from monthly to fortnightly payments is one of those classic pieces of advice that still works.

All four major banks promote it because 26 fortnightly payments per year equal 13 monthly payments - one extra month’s worth annually, without noticing much difference week-to-week.

• BNZ calls it “a simple psychological trick that works because it happens quietly in the background.”
• Westpac’s repayment calculator lets you see exactly how much time this can shave off your term.

Tip: Ask your bank to split your monthly amount in half and pay it every two weeks. You’ll reduce the total interest without increasing your annual outlay.

4. Use Lump Sums and Windfalls Wisely

Kiwibank suggests putting windfalls - like tax refunds, bonuses or inheritances - toward your mortgage rather than spending or saving at low interest.

Why? Because repaying high-interest debt first is the most effective guaranteed return you can earn.

For example:

• Putting a $5000 lump sum into a 6 % mortgage saves about $8000 in interest over 25 years.
• Sorted’s repayment calculator confirms: paying off principal early saves compound interest later.

Watch-out: If you’re in a fixed term, check how much you can repay without incurring early-repayment fees (most banks allow 5 % of the balance annually).

5. Avoid Capitalising Fees

ANZ and BNZ both caution that while it can be tempting to “add the fees to your mortgage,” it ends up costing more because you pay interest on that amount for decades.

Whenever possible, pay application and legal fees upfront rather than rolling them into your loan. On a $1 000 fee capitalised at 6 % over 25 years, you’ll pay around $1 000 extra in interest. That’s doubling the cost for convenience.

6. Consider a Split (Hybrid) Mortgage

Split mortgages - part fixed, part floating - are widely used in New Zealand. They offer the security of a fixed rate for most of your loan while keeping flexibility to make extra repayments or redraws on the floating portion.

• Westpac and BNZ both provide tools to model different splits, showing how much flexibility and interest you trade off.
• Mortgage advisers often suggest this setup for borrowers who expect rate changes or have irregular income.

Tip: Keep the floating portion manageable — enough to give you flexibility but not so large that rate rises cause stress.

7. Be Strategic with Revolving Credit

Revolving-credit loans (offered by most major banks) act like a large overdraft — your income is paid in, reducing the balance, and you draw from it for expenses. Interest is calculated daily, so keeping the balance low for as many days as possible is key.

This structure suits disciplined budgeters and those with variable income (e.g. self-employed members). However, if you don’t actively manage it, the flexibility can backfire and lead to slower debt reduction.

Kiwibank and ANZ both advise setting a firm monthly budget so you don’t erode the benefit. Enable.me calls this “using flexibility with focus.”

Before You Make Any Moves

• Check for break or early-repayment fees before making extra payments.
• Review your budget to make sure higher payments are sustainable if rates rise again.
• Prioritise other high-interest debts (like credit cards) before overpaying your mortgage.
• Get expert help — mortgage advisers, financial mentors or your own bank can model different repayment paths for free.

How HealthCarePlus Supports You

At HealthCarePlus, our goal is to help members become financially resilient — not by offering loans or advice, but by making sense of trusted information and helping you act with confidence.

We’ll keep curating insights from reliable NZ sources like Sorted, MoneyHub, Enable.me and our leading banks, so you can make better decisions for your financial wellbeing.

Sources:

• Sorted.org.nz - Mortgage guides and calculators
• MoneyHub.co.nz - Home-loan comparison tools
• Enable.me - Mortgage strategy and coaching
• Kiwibank - “Get mortgage-free faster” guide
• ANZ NZ - “Pay off your loan faster”
• BNZ - “Six ways to pay off your mortgage faster”
• Westpac NZ - Split-loan and repayment calculators

Written by: Alan Sharpe

Alan is a key member of the HealthCarePlus leadership team. With over 30 years experience in marketing and customer service roles he is a passionate advocate for the union movement and HealthCarePlus’s mission to create real, lasting value for their members