When you’re taking out a mortgage, one of the biggest decisions you’ll make is whether to go for a fixed or variable interest rate. Each option has its own pros and cons, and the right choice depends on your financial goals, risk comfort, and future plans.

Let’s break down how both work — and what might suit you best as a Kiwi homeowner or first-home buyer.

What Is a Fixed-Rate Mortgage?

A fixed-rate mortgage means your interest rate stays the same for an agreed period — typically between 1 and 5 years in New Zealand.
Your repayments remain steady throughout the term, no matter what happens to market rates.

Benefits:

• Certainty and stability: You’ll know exactly what you’re paying each month.
• Easier budgeting: Great if you like consistency and want to avoid surprises.
• Peace of mind: Ideal when you expect interest rates to rise.

Considerations:

• Less flexibility: Breaking a fixed-rate loan early can lead to break fees.
• No benefit from rate drops: If market rates fall, you’ll still pay your locked-in rate.

What Is a Variable (Floating) Rate Mortgage?

A variable-rate mortgage (or floating rate) moves up or down as market interest rates change.
When rates drop, your repayments may decrease — but when rates rise, your repayments will increase.

Benefits:

• Flexibility: Make extra repayments or pay off your loan early without penalties.
• Potential savings: Benefit from lower interest rates when the market dips.
• Easy to switch: You can refinance or fix your rate at any time.

Considerations:

• Uncertainty: Repayments can fluctuate, which can make budgeting trickier.
• Higher risk: Rate increases can quickly impact your cash flow.

Which Option Is Right for You?

It all depends on your financial goals and comfort with risk:

• Fixed = stability and peace of mind.
• Variable = flexibility and opportunity.
• Split = a balance that suits many Kiwi homeowners.

Many Kiwi homeowners choose a split mortgage — fixing part of their loan for security while keeping part variable for flexibility. This strategy helps you manage risk while still allowing extra repayments or early payoff.

How to Choose

Before you decide, ask yourself:

1. Do I want stable repayments or flexibility to adapt?
2. Am I comfortable with rate changes and market fluctuations?
3. Do I plan to make lump-sum payments or refinance soon?

A registered mortgage adviser can help you compare rates, understand the pros and cons, and structure a mortgage that aligns with your long-term goals.

Talk to Beryl and the Bricks & Mortgages Team

Whether you’re buying your first home, refinancing, or reviewing your current mortgage, our experienced team can guide you through every step.

Book your free mortgage consultation today and discover the best home loan structure for your financial journey.

Schedule your free consultation – https://calendly.com/bricksandmortgages/15-minutes-meeting

At Bricks & Mortgages, we’ll help you make a confident, informed choice that supports your financial goals — now and in the future.