Fixed vs Floating Mortgage NZ Comparison
Compare fixed-rate and floating-rate mortgages in New Zealand. Calculate repayments and interest costs.
Interactive Comparison Simulator
Adjust the variables below to simulate outcomes, compare interest rates, and see real-time projections.
Side-by-Side Comparison
A direct comparison of features, rules, limits, and eligibility requirements.
| Feature / Detail | Fixed Rate Mortgage | Floating Rate Mortgage |
|---|---|---|
Rate Stability | Locked (100% predictable payments) | Variable (moves with OCR changes) |
Repayment Flexibility | Capped extra payments (break fees apply if exceeded) | Unlimited extra repayments allowed |
Offset Account linking | Not supported | Fully supported by many lenders |
Inflation Protection | Low (eroded by inflation) | High (beats inflation long-term) |
Management Effort | None (passive) | Low (automated or index-tracked) |
Pros & Cons Breakdown
Analyze the advantages and drawbacks of each financial product before making a decision.
Fixed Rate Mortgage Pros & Cons
Advantages
- Complete payment certainty; no rate rise risk.
- Locks in lower rates in a rising market.
- Easier to budget household expenses.
Disadvantages
- Expensive break fees if you sell or refinance early.
- No savings if mortgage rates fall.
- Reverts to expensive floating rate if you forget to refix.
Floating Rate Mortgage Pros & Cons
Advantages
- Make unlimited extra repayments to pay off loan fast.
- No break fees; full freedom to refinance.
- Can link offset accounts to save interest.
Disadvantages
- Higher starting interest rates than fixed terms.
- Monthly payments rise if the OCR increases.
- Budget uncertainty.
The Verdict
Fixed is best for payment stability; Floating is best for offset features.
Fixed mortgages are the default NZ choice for budget certainty. Floating mortgages are expensive but offer redraw and offset benefits.
Choose Fixed Rate Mortgage if...
Risk-averse buyers, families, and first-time buyers needing budget certainty.
Choose Floating Rate Mortgage if...
Savers with high cash balances (to offset interest) or those planning to sell.
Frequently Asked Questions
Common questions answered regarding Fixed Rate Mortgage and Floating Rate Mortgage.
The Official Cash Rate (OCR) is the interest rate set by the Reserve Bank of New Zealand (RBNZ), which directly influences mortgage rates.
Yes, splitting (e.g. 80% fixed and 20% floating) is highly popular to balance budget safety with offset benefits.
This comparison is reviewed regularly and updated when tax laws, interest rates, or contribution limits change in the country.