New Zealand Mortgage Calculator 2024

How does this tool calculate the repayment?

It uses the standard amortisation formula for a principal-and-interest loan: the periodic rate is the annual rate divided by 12, 26 or 52, the number of payments is the term times that count, and the instalment is the amount that clears the loan exactly at the end. On the default inputs (an $800,000 price, $160,000 deposit, 6.5% and 30 years) that is $4,045 a month, $816,285 of interest and $1,456,285 repaid in total. The calculation is a single rate for the whole term; it does not model refixing.

What does the debt-to-income check do?

It divides the loan by the household income you enter and compares the result with 6, the reference multiple built into this tool. If the loan is more than six times income the line carries a warning, and the maximum-loan line shows income times six. A $540,000 loan on $70,000 income is 7.7x and flagged; a $640,000 loan on $120,000 is 5.3x and is not. The tool does not model how lenders apply Reserve Bank settings across their portfolios, investor limits, or any bank’s own serviceability test.

What does the loan-to-value warning mean?

It appears when the loan is more than 80% of the price, which means a deposit below 20%. The warning is informational. The tool does not add any low-equity fee, premium or higher rate, so the repayment shown for a 90% loan is calculated at the same rate as for an 80% loan. Whether a lender would approve the borrowing, and on what terms, is outside what this page can say.

Does paying fortnightly save money here?

Only slightly, and only because of the arithmetic of the rate convention. Choosing fortnightly makes the tool recompute a smaller instalment for 26 payments a year over the same term, so the loan still ends on schedule. On the default loan the fortnightly instalment is $1,866 and total interest is $815,598 against $816,285 monthly, a difference of $687. The larger savings people talk about come from paying extra, for example half the monthly amount every fortnight, and this tool does not model extra repayments.

What happens with zero, cleared or unusual inputs?

A cleared interest rate box counts as 0, and a term of 0 or less, which includes a cleared box, falls back to 30 years. A rate of 0 is treated as 0: the instalment is the loan divided by the number of payments and total interest is $0. A deposit larger than the price gives a loan of zero. If the income box is cleared or 0, the debt-to-income and maximum-loan lines display N/A instead of a meaningless ratio.

Which costs are not included?

Legal fees, valuation and inspection costs, insurance, council rates, break fees, any lender or low-equity charges, and moving costs are all outside the calculation. Interest-only periods, offset or revolving accounts, floating rates that move during the term and the effect of refixing are not modelled either. The 6.5% default is a placeholder, not a quoted rate.

How current are the limits built into this tool?

The 6x income multiple and the 80% loan-to-value line are fixed values in the code, labelled 2024. Lending rules and Reserve Bank settings change at least every year, this tool’s tables are not updated automatically, and the Reserve Bank, your lender or a qualified adviser decides what applies to your situation.