Different types of home loans
Home Loan from NZHLAn NZHL home loan is similar to revolving credit it is a mortgage account that is transactional and has all your income ‘channelled’ into the one account to maximise interest savings, however the loan limit decreases each month (like that of a table mortgage.) A managed home loan also involves several other components including debt management software and regular reviews with a consultant.HTML5 Icon
Standard Table MortgageThis is the most common type of home loan. You can choose a term up to 30 years. Most of your early repayments pay off more interest than principal, while most of the latter payments pay off more of the principal.HTML5 Icon
Reducing (Non-Table) MortgageReducing, Straight Line or Non-Table mortgages repay the same amount of principal with each repayment, but a reducing amount of interest each time. These are quite rare in New Zealand.HTML5 Icon
Interest Only MortgageYou only pay interest on the loan amount so the principal balance doesn't reduce. Typically interest only loans are for 6 months - 5 years terms, with full repayment due at the end of the loan or the balance is converted to a table mortgage at this time.HTML5 Icon
Revolving Credit MortgageRevolving credit loans work like a large overdraft. Your pay goes straight into the account and bills are paid out of the account when they’re due. By keeping the loan as low as you can at any time, you pay less interest because lenders calculate interest daily. You can make lump sum repayments and re-draw money up to your limit.HTML5 Icon
Offset MortgageOff Set mortgages use the balance of your transactional and savings accounts to offset the interest costs of your home loan. Eg if your home loan is $100k and you have $10k in your savings account you will only pay interest on $90k.HTML5 Icon
How they compare
Compare types of home loans
Home Loan from NZHLStandard TableReducingInterest OnlyRevolving CreditOffset
Savings Offset

Allows redraw of surplus funds

Fixed or Floating

Fully transactional bank account

Allows lump sum repayments

No day to day transaction fees

Reducing limit