Mortgage & Property Glossary

The maximum amount a bank will lend you, based on your income, expenses, and the RBNZ DTI cap.

Short-term lending to "bridge" the gap when you buy a new property before selling your current one.

Your total debt divided by your gross annual income. RBNZ limits owner-occupiers to 6× and investors to 7×.

An interest rate locked in for a set period (6 months to 5 years), giving certainty on repayments.

A variable interest rate that moves with market conditions; more flexible but less certain than a fixed rate.

Repayments cover only the interest — the loan balance does not reduce. Typically used by investors.

The percentage charged annually on your outstanding loan balance, expressed as a per-annum rate.

An extra interest charge applied when your LVR exceeds 80%, compensating the bank for higher lending risk.

Your loan as a percentage of the property value. Above 80% LVR usually means higher rates or a low-equity margin.

The total length of time to repay your mortgage in full — typically 25 to 30 years in NZ.

Your savings balance is "offset" against your loan to reduce the interest charged, without reducing the loan balance.

Standard mortgage repayments that reduce both the interest charge and the outstanding loan balance.

A flexible mortgage that works like an overdraft — money in reduces interest; money out increases the balance.

Whether your income is sufficient to comfortably cover mortgage repayments after living expenses.

Banks test whether you could still afford repayments if interest rates rise — typically assessed at 7–8%.

The legal entity that manages shared areas and finances for a unit title development — you must contribute via levies.

An independent professional inspection of a property's physical condition — essential before going unconditional.

The council's estimated value of your property, used for rates — not necessarily reflective of market value.

The official legal record of who owns a property and any interests or encumbrances registered against it.

You own a share of the total land and lease your specific area from your co-owners — common in NZ suburbs.

You own the land and building outright, with no ongoing ground rent or shared title obligations.

You own the building but lease the land from a ground lessor and pay ongoing ground rent.

A Land Information Memorandum from the council — a summary of official information recorded for a property.

An independent professional assessment of a property's current market value, often required by banks.

Common in apartments and townhouses — you own your individual unit and a share of the common areas.

The Credit Contracts and Consumer Finance Act — governs responsible lending and requires banks to scrutinise your expenses carefully.

A Kāinga Ora–backed mortgage allowing eligible first home buyers to purchase with just a 5% deposit.

The NZ government's public housing and homeownership agency, which backs the First Home Loan product.

NZ's workplace savings scheme — after 3 years of contributions, first home buyers can withdraw their balance (minus $1,000).

The RBNZ's benchmark interest rate — movements in the OCR flow through to mortgage rates within days.

NZ's central bank — sets the OCR and mortgage lending restrictions (DTI limits and LVR restrictions).

MortgageReady's composite 0–100 score measuring your overall home-buying readiness across DTI, deposit, and surplus.

The upfront cash you contribute to the property purchase — typically 20% of the purchase price for standard lending.

The shortfall between your current savings and the deposit you need for your target property.

The portion of your property that you own outright — property value minus the outstanding mortgage balance.

Your total income before tax, KiwiSaver, and any deductions — used in DTI calculations.

Take-home pay after PAYE tax, ACC levy, and KiwiSaver deductions — used in serviceability calculations.

The original amount borrowed — excluding interest. Your repayments gradually reduce the principal.

The money left each month after tax, living expenses, and debt payments — the key measure of mortgage affordability.

A signed purchase agreement that is still subject to conditions like finance approval, building inspection, or LIM.

The legal process of transferring property ownership — handled by a solicitor or conveyancer.

The research and checks carried out on a property before you commit to buying — includes LIM, building report, and title search.

Conditional bank approval in principle before you find a property — confirms how much they will lend you.

The final day when money is transferred, ownership changes hands, and you get the keys to your new home.

All conditions satisfied — you are legally committed to buy the property. Withdrawal incurs serious penalties.