Choosing the Right Structure
Many borrowers mix and match — for instance, fixing part of the loan for stability while keeping a floating or flexible portion for flexibility. The best option depends on your goals, cash flow, and comfort with rate changes.
Here’s where the mortgage adviser’s role comes in — they analyse your financial situation, risk tolerance, and long-term plans to help determine which loan structure (or combination) suits you best. Across all major banks, fixed and floating home loans operate in broadly similar ways. The main differences tend to be in specialised products such as offset loans and flexi/revolving credit facilities, where each bank offers different structures and features.
A fixed-rate home loan locks in your interest rate for a set term (commonly 6 months to 5 years). Your repayments remain constant, providing stability and certainty in your budgeting.
Key Points:
- Repayments can be Principal & Interest or Interest Only.
- Early repayment or breaking the term may incur fees.
- Ideal for borrowers who prefer predictable payments.
A floating-rate home loan (sometimes called a variable loan) has an interest rate that moves up or down as market rates change.
This gives you flexibility, but your repayments can increase or decrease over time.
Key points:
- You can make extra repayments or pay off the loan early without penalty.
- The rate can change anytime — offering potential savings when rates drop, but higher costs when they rise.
- Useful if you want the freedom to adjust your loan regularly or expect to pay it off quickly.
Flexible or revolving limit — they combine your loan and everyday banking to help reduce interest costs.
- Operates like a large overdraft — your salary and savings sit in the same account as your home loan.
- Depending on the bank and product type, the credit limit may gradually reduce over time or stay the same.
- You are charged interest only on the amount you overdraw and the number of days it is used for. Interest is calculated daily and charged at the end of the month.
- Extremely flexible — you can withdraw or repay funds anytime, if you stay within the limit.
- Best suited for disciplined borrowers who manage cash flow well and want to pay off their loan faster.
An offset loan allows you to link your home loan to one or more eligible transaction or savings accounts. The balances in these linked accounts effectively reduce the portion of your home loan on which interest is calculated. This can help minimise the interest you pay over time while still giving you full access to your money.
Who can link accounts, Depending on the lender, you may be able to link:
- Your own transaction and savings accounts
- Accounts belonging to a joint borrower
- In some cases, certain family members’ accounts (such as parents, children, or partners), subject to eligibility
Some lenders allow a large number of accounts to be linked, enabling you to maximize the offset benefit by grouping multiple balances together.
Overall, an offset loan is ideal for borrowers who want to reduce interest costs while keeping their savings accessible for everyday use or emergencies.
Choose your bank below to explore Flexi/Revolving/Offset Products
The ANZ Flexible Home Loan is a revolving-credit style home loan that gives you maximum flexibility in managing your money.
Interest rate: Variable
Calculation: Interest is calculated daily on the amount you have used
Interest charged frequency: Typically monthly
Key Features:
- Flexible repayments: Make repayments when it suits you—there’s no fixed repayment schedule.
- Withdraw and extra payments: Any extra money you deposit reduces interest immediately, and you can withdraw funds when needed.
- Linked accounts: Your loan is linked to your ANZ transaction account for easy access and management.
- Interest: You pay interest only on the amount outstanding, which can help reduce overall interest costs if you deposit extra funds.
Example:
Suppose you have a $500,000 ANZ Flexible Home Loan.
- You deposit $50,000 into your loan account from your savings. The outstanding balance now reduces to $450,000, and interest is calculated only on this lower amount.
- Later, you need $20,000 for home renovations and withdraw it from the loan. Your balance increases to $470,000, and interest is calculated on this new balance.
This shows how your repayments and deposits directly affect the interest you pay.
Best for:
Borrowers with irregular income, those who want to deposit lump sums to reduce interest, or anyone seeking complete control over repayments and withdraws
At ASB, choose a payment option that suits you. With revolving credit, you have the option of an Orbit Home Loan; where your credit limit stays the same over the life of the loan, or an Orbit FastTrack Home Loan; where the credit limit reduces regularly. A reducing limit can help you with repaying the principal on your loan.
Interest rate: Variable
Calculation: Interest is calculated daily on the amount you have used
Interest charged frequency: Typically monthly
1. Orbit Home Loan – Non-Reducing Credit Limit
Think of this like a big “money bucket” linked to your home loan.
- You can borrow up to the full amount of the bucket whenever you want.
- When you pay money in, it reduces the amount of interest you owe, but you can still take money back out (withdraw) anytime up to your full bucket limit.
- The total bucket size stays the same over time—it doesn’t automatically shrink.
Example:
- Your “bucket” is $500,000. You borrow $300,000.
- You put $50,000 back in. Interest is now only calculated on $250,000.
- Later, you need $40,000 for renovations. You withdraw it. Your balance goes up to $290,000.
- The bucket limit is still $500,000.
In simple terms: Maximum flexibility, but you need to be disciplined to reduce your debt, because the limit won’t automatically go down.
2. Orbit FastTrack Home Loan – Reducing Credit Limit
The Orbit FastTrack is a flexible home loan that works like a revolving credit facility, but with a twist: your maximum borrowing limit reduces gradually over time.
- You can withdraw money when needed, but the limit gradually decreases over the life of the loan.
- Even though the limit is reducing, you still pay interest on the money you’ve borrowed, not on the total facility.
Example:
- You have an Orbit FastTrack facility with a starting credit limit of $500,000.
- You borrow $300,000 to buy your home.
- Interest is charged only on the $300,000 you are using, not the full $500,000 limit.
Now let’s say:
- You deposit $50,000 from savings into the loan. Your outstanding borrowed balance becomes $250,000, and interest is now calculated on this lower amount.
- Later, you need $20,000 for renovations, so you withdraw it. Your balance goes up to $270,000, and interest is now calculated on this new balance.
Meanwhile, the maximum facility limit is gradually reducing according to the repayment schedule (e.g., from $500,000 down to $490,000, $480,000, etc.), which encourages principal reduction over time.
BNZ offers a range of home loan products designed to suit different financial needs. Two popular options are the TotalMoney Offset Home Loan and the Rapid Repay Home Loan (revolving credit) .
Interest rate: Variable
Calculation: Interest is calculated daily on the amount you have used
Interest charged frequency: Monthly
1. TotalMoney Offset Home Loan
The TotalMoney Offset Home Loan links your home loan to your BNZ transaction and savings accounts—and in some cases, accounts of a joint borrower or certain family members. The balances in these accounts reduce the portion of your home loan on which interest is charged. Importantly, you still have full access to your money; it is not permanently paid into the loan.
Who can be linked:
- Your own BNZ transaction and savings accounts
- Accounts of a joint borrower
- Certain family members’ accounts (parents, children, and in some cases partners)
- Up to 50 accounts can be included in the TotalMoney group to maximize offset benefits
How it works (example):
- Home loan balance: NZ$400,000
- Savings in linked accounts: NZ$20,000
- Interest is charged only on NZ$380,000 (400k − 20k)
If you later spend or add to your savings, the interest calculation adjusts accordingly. This allows your savings to “work harder” to reduce interest costs, without locking them away.
Best for:
- Borrowers with regular savings or surplus funds who want to reduce interest while keeping access to their money
- Those who prefer predictable repayments with the benefit of lower interest.
2. Rapid Repay Home Loan (Revolving Credit)
The Rapid Repay Home Loan is a flexible, revolving credit-style loan. You have a set credit limit, and you can borrow, repay, and withdraw money as needed. Interest is charged only on the money you borrow. Over time, the credit limit reduces gradually, helping ensure the loan is paid down while giving you maximum flexibility.
How it works (example):
- Credit limit: NZ$500,000
- Available funds at the start: NZ$350,000
- Interest charged on: NZ$150,000 (the portion of the loan currently used)
Salary deposited: NZ$8,000 → your available funds increase to NZ$358,000.
- This temporarily lowers interest because the effective loan balance is reduced.
Withdraw for living expenses: NZ$6,000 → your available funds decrease to NZ$352,000.
- Interest is recalculated daily on the amount you’ve used (now NZ$148,000).
Over time: The maximum facility limit gradually reduces (e.g., NZ$500,000 → NZ$490,000 → NZ$480,000), encouraging you to repay the principal faster.
Best for:
- Borrowers with variable income or irregular cash flows.
- Those who want maximum flexibility to deposit funds, withdraw when needed, and manage interest daily.
- Clients who are disciplined with repayments and cash flow.
Westpac offers two flexible home loan options that help borrowers manage interest and repayments in different ways: the Offset Home Loan and the Flexi / Revolving Credit Home Loan.
Interest rate: Variable
Calculation: Interest is calculated daily on the amount you have used
Interest charged frequency: Typically monthly
1. Offset Home Loan – “Choices Floating with Offset”
With the Offset Home Loan, you can link your transaction or savings accounts to your home loan. The money in these accounts reduces the portion of your loan that interest is charged on, without locking your funds away—you still have access whenever you need it.
Who can link accounts:
- Your own Westpac accounts
- Accounts of a joint borrower
- Certain family members’ accounts (for example, spouse, partner, or children, depending on eligibility)
Example:
- Loan amount: NZ$300,000
- Linked accounts: NZ$25,000
- Interest is calculated only on NZ$275,000 (300k − 25k)
If you spend some of your linked savings, interest will increase. If you deposit more funds, interest decreases. This way, your money helps lower interest while staying accessible.
Who it suits:
- Borrowers with steady income and savings
- Those wanting predictable repayments and a reduction in total interest paid.
2. Flexi / Revolving Credit Home Loan – “Choices Everyday”
The Flexi Home Loan works like a combination of a mortgage and a flexible account. You have a credit limit, and you can deposit money (like your salary) to reduce the outstanding balance and interest. You can also withdraw funds when you need them. Interest is charged daily on the balance you are using.
Example:
- Credit limit: NZ$350,000
- Available funds at the start: NZ$150,000 (the amount you can still borrow before reaching the limit)
Salary deposited: NZ$8,000 → your available funds increase to NZ$158,000.
- Interest is reduced because the effective loan balance is lower.
Spending: You withdraw NZ$6,000 for bills → your available funds decrease to NZ$152,000.
- Interest is recalculated daily on the balance you are using.
Who it suits:
- Borrowers with variable income or irregular expenses
- Those who want flexibility to manage repayments and withdraw funds as needed.
Kiwibank offers two flexible home loan options that help you pay off your home faster and save on interest — the Offset Home Loan and the Revolving Credit Home Loan.
Interest rate: Variable
Calculation: Interest is calculated daily on the amount you have actually used
Interest charged frequency: Typically, monthly
1. Offset Home Loan
How it works:
The Offset Home Loan lets you link your everyday and savings accounts to your home loan. The money in those linked accounts reduces the amount of your loan that interest is charged on.
You still have full access to your money — it stays in your accounts and can be used anytime.
Who can link accounts:
You can link your own Kiwibank accounts, plus accounts belonging to your partner, children, parents, or a joint borrower (up to eight accounts in total).
Example:
- Home loan: NZ$400,000
- Linked accounts: NZ$50,000
- You’ll only pay interest on NZ$350,000 (400k − 50k)
If you spend some savings, your interest will go up slightly. If you add more money to your linked accounts, your interest goes down.
Best for:
- People who have some savings and want those funds to work for them.
- Those who prefer a standard loan with predictable repayments but want to save on interest.
2. Revolving Credit Home Loan
How it works:
The Revolving Credit Home Loan works like a large overdraft. You get a credit limit, and you only pay interest on the amount you’ve used.
Your salary and other income can go straight into this account, temporarily reducing the loan balance and saving you interest. You can withdraw funds again whenever you need them.
Example:
- Credit limit: NZ$300,000
- Available funds at the start: NZ$200,000 (the amount you can still borrow before reaching the limit)
Salary deposited: NZ$6,000 goes into the account → your available funds increase to NZ$206,000.
- Interest is reduced because the effective loan balance is lower.
Spending: You pay NZ$4,000 for bills → your available funds decrease to NZ$202,000.
- Interest is recalculated daily on the actual balance used, so it increases slightly.
Best for:
- People with irregular income (contractors, commission-based workers, etc.
- Those who want full flexibility to deposit, repay, or withdraw money anytime.
TSB’s revolving credit home loan works like a flexible mortgage combined with a bank account. You have a fixed credit limit, and you only pay interest on the portion of the loan you use. You can deposit money to temporarily reduce interest and withdraw funds when needed.
Interest rate and calculation:
Type: Variable (can go up or down over time)
Calculation: Interest is calculated daily on the amount you’ve borrowed (used balance)
Charge frequency: Typically, monthly
Example (using available funds):
Credit limit: NZ$400,000
Available funds: NZ$150,000 (the unused portion of your credit limit)
Salary deposited: NZ$7,000 → available funds increase to NZ$157,000 → less interest because the used balance is lower
Withdraw for expenses: NZ$5,000 → available funds drop to NZ$152,000 → interest recalculated daily
Key points:
- Making extra repayments or depositing income lowers your used balance, which reduces interest.
- Flexible for people with irregular income or who want a home loan that works like a transactional account.
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