Mortgage Repayments Too High? Your Options, in Order
If the mortgage is squeezing you, there are more options than most people realise, and nearly all of them work better before you've missed a payment.
First, talk to your lender early
This is the part people put off, and it's the part that matters most. Lenders deal with this every day. A customer who calls before missing a payment gets a much wider set of options than one who calls after three. Missed payments also mark your credit file, which narrows what other lenders will do for you later.
Options that lower the payment
| Option | How it helps | The cost |
|---|---|---|
| Extend the loan term | Spreads what you owe over more years. | More interest in total. You can shorten it again later. |
| Interest-only for a period | You pay only interest, often for six to twelve months. | The balance doesn't fall, and payments are higher afterwards. |
| Restructure | Move off an expensive floating portion, or change how the loan is split. | Usually nothing, unless a fixed term is broken. |
| Repayment holiday | Payments pause for a short time. | Interest keeps being added, so the loan grows. A last resort. |
| Refinance | A lower rate or longer term with another lender. | Legal fees and possibly break fees. You must qualify with the new lender. |
Extending the term is the least glamorous and often the most effective. Going from 18 years remaining back to 25 can take a meaningful amount off each payment, and you can raise repayments again when things ease.
Your right to ask for hardship relief
Under the Credit Contracts and Consumer Finance Act, if you can't meet repayments because of something you couldn't reasonably have foreseen, such as illness, injury, losing your job or the end of a relationship, you can apply to your lender for a hardship variation. You can ask for a longer term, a payment pause, or both.
Apply in writing and explain what's changed. The lender has to consider it and reply within set timeframes. If you think the decision is unfair, you can complain to the lender's dispute resolution scheme, which is free. Citizens Advice Bureau explains the process.
Does refinancing help?
Sometimes. A new lender assesses you as a new borrower, and if money is already tight you may not pass its affordability test. Where refinancing does help is when you're on an uncompetitive rate, have decent equity and a clean repayment record. Then a lower rate, a longer term and possibly consolidating other debts can together make a real difference.
If it isn't going to work
Sometimes the honest answer is that the house costs more than the household can carry. Selling on your own terms, with time to present the property properly, nearly always leaves you better off than a forced sale. That's a hard conversation, and we'd sooner have it with you early than watch the choice be taken away.
This article explains how New Zealand lenders generally assess these situations. It is general information, not personalised financial advice, and lender policy changes often — check your own position with a registered adviser. Official sources: Reserve Bank of New Zealand for lending policy and the OCR, and Sorted.org.nz for independent government-backed money guidance.
Lowering mortgage repayments: common questions
Feeling the squeeze?
Tell us your balance, rate and what's changed. We'll tell you confidentially whether a restructure or a different lender could lower your repayments.
- ✓ Your bank's offer compared with the 23 lenders on our panel
- ✓ Break fees, legal costs and any cashback clawback worked out first
- ✓ We only recommend switching when the numbers work
- ✓ No fee on residential home loans: the lender pays us
Finch Mortgages Limited (FSP1011125) is an Authorised Body under Finsure New Zealand Limited's financial advice provider licence (FSP1005389). Disclosure statement