NZ Mortgage Glossary
38 Terms Explained.

Rates & Loan Structure

OCR (Official Cash Rate)

The interest rate set by the Reserve Bank of New Zealand that anchors the cost of money across the economy. Floating and shorter fixed mortgage rates move with OCR changes, usually with a short delay.

Fixed Rate

A mortgage interest rate locked in for a set period, commonly 6 months to 5 years in NZ. Repayments stay the same for that term regardless of market rate movements.

Floating Rate

A mortgage rate that moves with the market rather than being locked in. Allows unlimited extra repayments without break fees, but offers no protection if rates rise.

Split Loan

A mortgage divided into two or more portions, each with its own rate type or term — for example, 70% fixed for 2 years and 30% floating — balancing certainty with flexibility.

Table Loan

The standard NZ mortgage structure where each repayment is a fixed total amount that blends principal and interest, with the interest portion shrinking over the loan term.

Revert Rate

The floating rate a loan automatically moves to once a fixed term ends, unless the borrower refixes or refinances beforehand. Usually higher than the fixed specials borrowers had.

Break Fee

A cost charged when a borrower exits a fixed-rate loan early, calculated to cover the lender's loss from re-lending the money at current wholesale rates.

Refix

Choosing a new fixed-rate term with your existing lender when your current fixed period ends, as an alternative to reverting to floating or refinancing elsewhere.

Deposit & Equity

Deposit

The portion of a property's purchase price a buyer contributes from their own funds or approved sources (savings, KiwiSaver, gifts), with the remainder covered by the mortgage.

Equity

The difference between a property's current market value and the outstanding mortgage balance — effectively the portion of the property the owner actually owns outright.

LVR (Loan-to-Value Ratio)

The mortgage amount expressed as a percentage of the property's value. A $560,000 loan on a $700,000 property is 80% LVR. The Reserve Bank restricts how much high-LVR lending banks can do.

Low Equity Margin / Premium

An additional fee or rate loading some lenders charge on loans above 80% LVR, reflecting the higher risk of lending with a smaller deposit buffer.

Mortgage Top-Up

Increasing an existing mortgage with the current lender, using built-up equity, without switching lenders or refinancing the whole loan. Read the full guide →

Offset Mortgage

A loan structure linked to a savings account, where the account balance reduces the mortgage balance interest is calculated on, without the funds being locked away.

Revolving Credit

A flexible loan facility that works like a large overdraft secured against your home — draw down and repay funds as needed, paying interest only on what's drawn.

Assessment & Approval

Pre-Approval

A lender's conditional confirmation of how much they're willing to lend, issued before a specific property is found, typically valid 60-90 days.

Serviceability

A lender's assessment of whether a borrower can afford the loan repayments, based on income, expenses, existing debt, and a stress-tested interest rate.

Stress Test Rate

An interest rate well above current carded rates that lenders use to test whether a borrower could still afford repayments if rates rose.

DTI (Debt-to-Income Ratio)

Total debt — including the new mortgage — divided by gross annual income. Bank lending is restricted above a DTI of 6 for owner-occupiers and 7 for investors. Check yours →

CCCFA

The Credit Contracts and Consumer Finance Act — legislation requiring lenders to closely verify a borrower's actual living expenses and affordability before approving a loan.

Conditional Offer

A signed sale and purchase agreement that depends on conditions being met, such as finance approval or a satisfactory building report, before it becomes binding.

Unconditional Offer

A binding sale and purchase agreement with no remaining conditions — common at auctions, where finance must already be confirmed before bidding.

Guarantor

A person, often a parent, who agrees to be legally responsible for a loan if the primary borrower can't make repayments, sometimes securing it against their own property.

Family Guarantee

A structure where a family member secures part of a buyer's deposit shortfall against equity in their own home, without transferring cash.

NZ First Home Schemes

Kāinga Ora First Home Loan

A government-backed low-deposit home loan scheme allowing eligible first home buyers to purchase with as little as 5% deposit through participating lenders.

KiwiSaver First Home Withdrawal

The ability to withdraw most of a KiwiSaver balance toward a first home deposit after 3+ years of contributions. Read the full guide →

New-Build LVR Exemption

A Reserve Bank rule allowing banks to lend against genuine new-build properties outside standard LVR restrictions, often enabling a lower deposit.

Property & Legal

Freehold

The most complete form of property ownership in NZ, where the owner holds the land and buildings outright, subject only to any registered mortgage or covenants.

Cross-Lease

An ownership structure where multiple owners jointly own the underlying land and each individually leases their specific dwelling — common on subdivided sections.

Unit Title

An ownership structure, common for apartments and townhouses, where each owner holds their unit individually and shares common areas through a body corporate.

Body Corporate

The legal entity formed by all unit owners in a unit-titled development, responsible for managing and funding shared building maintenance.

LIM Report

A Land Information Memorandum from the local council, summarising a property's consents, rates, and hazards — commonly obtained during due diligence.

Registered Valuation

A formal property valuation completed by a registered valuer, used by lenders to confirm a property's value supports the loan amount requested.

Bright-Line Test

A tax rule treating profit from selling residential property within a set period of purchase as taxable income, unless an exemption applies. Read the full guide →

CCC (Code Compliance Certificate)

Council confirmation that completed building work complies with the Building Code — lenders typically require this before releasing construction loan funds.

Special Situations

Bridging Finance

A short-term loan covering the gap when a buyer needs to complete a new purchase before their existing property has sold. Read the full guide →

Mortgagee Sale

A forced sale of a property by the lender after a borrower defaults, often resulting in a below-market price and a fast settlement timeline.

Reverse Mortgage

A loan for homeowners typically aged 60+ that releases home equity without regular repayments, with interest compounding until the home is sold. Read the full guide →

Non-Bank Lender

A mortgage lender that isn't a registered bank — often more flexible on credit history or income type, typically at a higher rate than main-bank lending.

FSP (Financial Service Provider)

A registration number identifying a financial adviser or broker on New Zealand's official Financial Service Providers Register.

Related NZ mortgage resources