Finding the right mortgage can be confusing — especially with so many structures and interest-rate options. At Best Mortgages, we help buyers across Tauranga and the Bay of Plenty compare lenders, understand how each loan type works, and choose the mix that fits their lifestyle, budget, and long-term plans.

Understanding How a Mortgage Works

A mortgage is simply a loan secured against a property. You borrow money from a lender to buy a home and agree to repay it — plus interest — over time, usually 25 to 30 years. Each repayment covers some interest and a portion of the principal. The structure and rate type you choose will affect how fast you build equity and how predictable your payments are.

1. Fixed-Rate Mortgages

A fixed-rate mortgage keeps the same interest rate for a set term — commonly one to five years. Why people choose it: stability and easy budgeting. Things to watch: you’re locked in; breaking a fixed term early can trigger a break fee. Many Tauranga clients fix for one to two years, then reassess when the market shifts. We help you decide which term best matches your plans.

2. Floating or Variable-Rate Mortgages

A floating (variable) rate moves up or down with market conditions — usually following the Reserve Bank’s OCR. Advantages: complete flexibility to repay early or make lump-sum payments. Downside: repayments can rise if interest rates climb. Some Tauranga homeowners combine a floating portion with a fixed portion to balance certainty and flexibility.

3. Split or Combination Mortgages

A split loan lets you fix part of your mortgage while keeping the rest floating. For example, fix 70 percent for two years and keep 30 percent variable. Why it helps: stability on most of your loan but freedom to repay extra. We often use this for first-home buyers in Papamoa or Bethlehem who plan to make early lump-sum payments from bonuses or KiwiSaver top-ups.

4. Table Loans

This is New Zealand’s most common loan structure. Your repayments stay roughly the same each month (assuming rates don’t change). Pros: predictable budgeting and steady progress. Cons: more total interest than a reducing-balance loan because you repay principal more slowly at the start.

5. Reducing Loans

With a reducing loan, each payment includes a fixed amount of principal plus declining interest. Benefit: you pay less overall interest and clear the debt faster. Challenge: higher initial payments, so it suits those on stronger incomes who want to become mortgage-free sooner.

6. Revolving Credit Loans

Think of this as a large overdraft linked to your everyday account. Your income goes in, bills go out, and whatever remains lowers your balance. Interest is calculated daily, so even short-term credits reduce interest costs. Great for: disciplined borrowers who manage cash flow closely. Caution: without structure, it’s easy to slip back into debt since there are no fixed repayment dates. This setup works well for self-employed clients in Greerton who receive irregular income — it offers flexibility while saving interest.

7. Interest-Only Mortgages

For a set period (often one to five years), you pay only the interest — not the principal. Why use it: lower payments while completing renovations or waiting for income growth. Downside: the balance doesn’t reduce, so total interest is higher. Lenders generally limit this to investors or short-term borrowers.

8. Low-Deposit Mortgages

Many first-home buyers worry about not having 20 percent saved. Some banks and non-banks will lend up to 90 percent LVR. Trade-off: slightly higher rates or low-equity fees. Tip: combining your KiwiSaver and the First Home Grant can make a big difference. At Best Mortgages, we compare low-deposit options daily and often find lenders open to flexible criteria — especially for buyers with good income but smaller savings.

Real-World Example

Recently, a young couple from Matua came to us after their bank declined them due to a 15 percent deposit. We restructured their application through a non-bank lender that recognised their stable combined income and low overall debt. Within five days they had full approval and are now settling on their first home in the Bay of Plenty — proof that the right loan structure and advice can make all the difference.

Why Work with Best Mortgages

• Independent advice: We compare major banks and non-banks to find what truly fits.
• Local expertise: We’ve helped Tauranga buyers from Mount Maunganui to Welcome Bay secure finance faster.
• Personal service: You deal directly with an experienced mortgage broker, not a call centre.
• Ongoing support: We review your loan regularly to keep it working for you.

Final Thoughts

The right mortgage can save you thousands over its lifetime. Whether you’re buying your first home, refinancing, or exploring non-bank options, understanding each loan type helps you choose confidently. At Best Mortgages, our job is to make that choice simple — so you can focus on finding the home you love, not the paperwork behind it.

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