When was the last time you sat down and reviewed your home loan? If you’re like most people, you probably just check the interest rate and move on. But here’s the real question you should be asking yourself: do you actually have the best home loan for your situation?
The best home loan isn’t just about the lowest interest rate. It’s about how well it fits your lifestyle, your goals, and how quickly it helps you become mortgage-free.
Why You Should Look Beyond Interest Rates
It’s easy to get caught up in comparing interest rates because that’s what the banks and media always talk about. And yes, you absolutely deserve a competitive rate. But have you noticed how the banks rarely talk about loan features that help you pay your mortgage off faster?
That’s because every dollar you save is a dollar less they earn.
If you only focus on the interest rate, you might be missing out on the flexibility and control that could save you thousands and shave years off your mortgage.
Fixed Home Loans: Great for Certainty, Limited for Flexibility
If you like knowing exactly what your repayments will be each month, then fixed rates probably appeal to you. In New Zealand, fixed rates are usually lower than floating rates too, which makes them attractive.
But here’s the trade-off: once you lock in, it’s much harder to make changes. You might want to pay extra when you can afford it, but the bank will usually only let you increase repayments a little. And if your circumstances change, reducing your repayments isn’t always possible either.
Wouldn’t it be great if you could:
- Increase your repayments when you’ve got spare cash
- Drop them back to the minimum if life throws you a curveball
- Access (redraw) any extra money you’ve paid off, just in case you need it
That kind of flexibility is what makes the difference between just having a mortgage… and having a mortgage that works for you.
Offset Accounts: Use Your Money Smarter
Have you heard of an offset account? If not, you’re not alone, most Kiwis haven’t, and only a few banks even offer them.
Here’s how it works: instead of letting your savings sit in different accounts, earning next to nothing (and being taxed), you link them to your home loan. The money then “offsets” your mortgage, so you only pay interest on the difference.
Let’s say you owe $500,000 on your home loan, but you have $20,000 spread across your savings and everyday accounts. With an offset account, you’d only pay interest on $480,000.
That’s a simple switch that could save you thousands, without you having to change how you spend day to day.
Revolving Credit: The Loan That Rewards Discipline
If you’re disciplined with money, a revolving credit account could be your secret weapon. Think of it like a big overdraft linked to your mortgage. You put all your income into it (your salary, rental income, everything), and every dollar reduces your loan balance.
Because interest is charged daily, the days when your money sits in there, even before bills go out, are working in your favor. Over time, those small gains add up to huge savings.
The catch? You need to be careful. It’s tempting to dip back into the money you’ve already paid off, and if you’re not disciplined, you might not make much progress. But if you’re good with budgeting, a revolving credit account can be one of the fastest ways to smash down your mortgage.
Which Loan Type Is Best for You?
Here’s the part you’ve probably been waiting for: which type of loan should you choose? The answer depends on your lifestyle and money habits:
- Fixed Loans – Perfect if you want certainty and peace of mind. If you’re on a set budget, prefer stable repayments, or just like to know exactly where you stand, this is a safe choice.
- Offset Accounts – Great if you keep decent money in savings or everyday accounts. Instead of earning low interest, you use that money to reduce the interest you’re paying on your mortgage. This option is especially good if you want flexibility without sacrificing access to your cash.
- Revolving Credit – Best if you’re financially disciplined and like the idea of putting every spare dollar to work. It requires good habits, but if you manage it well, you can knock years off your loan.
In many cases, the smartest move is a mix. You might fix part of your loan for stability, use an offset account for your savings, and set up a revolving credit account to fast-track repayments. The right combination depends on you.
So, Do You Have the Best Home Loan?
The best home loan isn’t just the one with the lowest advertised rate. It’s the one that gives you control, flexibility, and the chance to become debt-free faster.
If you’re not sure whether your loan is really working in your favor, now’s the perfect time to review it. At Mortgage Sense, I work with you to look beyond just interest rates and design a loan structure that puts you ahead, not the bank.
