How is a mortgage repayment calculated?

A standard mortgage repayment is calculated using the amortisation formula: M = P x [r(1+r)^n] / [(1+r)^n - 1], where P is the loan principal, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments (years multiplied by 12). Each payment covers the interest accrued that month, with the remainder reducing the principal. Early payments are mostly interest; later payments are mostly principal.

What is the difference between a fixed and a floating mortgage rate?

A fixed mortgage rate locks in your interest rate for a set period (commonly 6 months to 5 years in New Zealand). Your repayments stay the same during that period, making budgeting easier. A floating (variable) rate moves with the market and can go up or down at any time, giving you flexibility to make extra repayments without penalty but with less certainty about future costs. Many New Zealand borrowers split their loan across both fixed and floating portions.

How much deposit do I need for a home loan in New Zealand?

Most New Zealand banks require a minimum 20% deposit for a standard home loan (meaning you can borrow up to 80% of the property value, known as an 80% LVR). Lending above 80% LVR is subject to Reserve Bank of New Zealand restrictions and often attracts a low-equity premium (additional interest margin). First home buyers may access KiwiSaver and First Home Grant funds to help reach the required deposit. Some lenders have specific products for deposits as low as 5% to 10% under certain conditions.

Home Mortgage Calculator

Work out your home loan repayments. Enter your loan amount, annual interest rate, and loan term to see your monthly payment, total interest, and the full cost of your mortgage.

Use the rate comparison table to see how your monthly payment and total interest change at different interest rates.

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Updated June 2026 Standard mortgage amortisation formula. Interest rates are illustrative only; check with your lender for current rates.

1. Loan Details

Home loan amount

Annual interest rate

Loan term

Repayment frequency

2. Optional: Property Details

Property purchase price (for LVR)

Deposit amount

Extra repayment per period (optional)

Your Mortgage Repayments

Repayment
-
per month

Total Interest

over the full term

Total Repaid

principal + interest

LVR

loan-to-value ratio

Repayment Breakdown

Loan amount-

Annual interest rate-

Loan term-

Repayment frequency-

Regular repayment-

Total number of payments-

Total interest paid-

Total amount repaid-

With Extra Repayments

Extra per period-

Time saved-

Interest saved-

New total interest-

New total repaid-

Property price-

Deposit-

LVR-

Monthly Payment at Different Interest Rates

Interest Rate	Monthly Payment	Total Interest	Total Repaid

Summary: Enter your loan details above.

How Home Mortgage Repayments Are Calculated

A home mortgage uses a standard amortisation formula. Each period, interest is charged on the outstanding balance; the rest of your repayment reduces the principal. Over time the interest portion falls and the principal portion rises, until the loan is paid off in full at the end of the term.

The formula for a regular repayment M is:

M = P x [r(1 + r)^n] / [(1 + r)^n - 1]

Where P is the loan principal, r is the interest rate per period (annual rate divided by the number of periods per year), and n is the total number of payment periods.

Worked Example

Defaults used in this calculator: loan of $650,000, interest rate of 6.5% per year, 30-year term, repaying monthly.

Monthly rate r = 6.5% / 12 = 0.54167% = 0.0054167
Number of payments n = 30 x 12 = 360
Monthly payment M = 650,000 x [0.0054167 x (1.0054167)^360] / [(1.0054167)^360 - 1]
(1.0054167)^360 = approximately 6.9918
M = 650,000 x [0.0054167 x 6.9918] / [6.9918 - 1] = 650,000 x 0.037876 / 5.9918 = $4,108.44 per month
Total repaid = $4,108.44 x 360 = $1,479,039
Total interest = $1,479,039 - $650,000 = $829,039

How Interest Rates Affect Your Repayments

Interest Rate	Monthly Payment (30 yr, $650k)	Total Interest
5.0%	$3,489	$606,163
5.5%	$3,691	$678,626
6.0%	$3,897	$752,948
6.5%	$4,108	$829,039
7.0%	$4,324	$906,808
7.5%	$4,545	$986,162

Even a 1% increase in interest rate adds significantly to your total repayment over a 30-year term. This is why securing a competitive rate and making extra repayments where possible can save tens of thousands of dollars.

Loan-to-Value Ratio (LVR)

LVR is your loan amount expressed as a percentage of the property value. It is a key measure lenders use to assess risk. In New Zealand, the Reserve Bank limits the proportion of high-LVR lending banks can do. Most owner-occupier borrowers need at least a 20% deposit (80% LVR). Borrowers with less than 20% deposit may still get a loan, but typically pay a higher interest rate (low-equity premium) or need to meet stricter criteria.

LVR = Loan Amount / Property Value x 100

Making Extra Repayments

Making extra payments on top of your regular repayment can significantly reduce both the time to pay off your mortgage and the total interest you pay. Even small regular additional amounts compound over time. For example, paying an extra $200 per month on a $650,000, 30-year, 6.5% mortgage cuts nearly four years from the term and saves more than $100,000 in interest.

Most floating-rate mortgages in New Zealand allow unlimited extra repayments. Fixed-rate mortgages typically allow a limited amount of extra repayments each year without break fee penalties.

Fixed vs Floating Rates

New Zealand mortgage borrowers can choose between fixed rates (locked for 6 months to 5 years) and a floating (variable) rate that can change at any time. Fixed rates give certainty over repayments for the fixed period but typically carry break fee penalties for early repayment or refinancing. Floating rates allow unlimited extra repayments and flexibility but payments change when the bank adjusts its rate, typically following movements in the Official Cash Rate (OCR) set by the Reserve Bank of New Zealand.

Related Calculators

Mortgage Calculators: all NZ home loan calculators in one place.
Mortgage Repayment Calculator: compare repayment scenarios side by side.
Mortgage Extra Repayment Calculator: see how extra payments cut your loan term.
Mortgage Amortisation Schedule: full payment-by-payment breakdown.
Mortgage Refinance Calculator: is it worth switching lenders?

Sources and method: Standard mortgage amortisation formula (principal, interest, amortisation). Reserve Bank of New Zealand LVR restrictions (rbnz.govt.nz). Interest rate comparisons are illustrative only; contact your lender for current applicable rates.

This calculator provides indicative estimates only. It does not account for lender fees, mortgage insurance, rate changes during the term, or other charges. Actual repayments will depend on your specific loan agreement. Always confirm details with your lender or a registered financial adviser.