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Reducing The Mortgage

  • The bigger your deposit, the better your chances of negotiating a good deal.
  • Negotiate all fees, such as establishment costs.
  • Investigate the use of a revolving credit facility. This is when your regular income is credited directly against your mortgage as a form of repayment. However, only a part of your income will eventually be used as a mortgage repayment. As you require the use of the rest of your income for other needs, you can "draw down" on your revolving credit facility.
    The benefit is that for a small window of opportunity, the balance of your mortgage is reduced and this, of course, reduces the interest payments. Used correctly, such a facility can potentially reduce interest payments over the term of your mortgage by thousands of dollars. Discuss the details and costs with your bank.
  • Pay off as much as you can afford. Increasing your repayments from as little as $10 each week can take years off your mortgage.
  • Pay off the mortgage as fast as you can. Look at all options to speed up repayments, from making lump sum payments, to using your pay increase to reduce your debt.
  • If a bank gives you an extra loan, it's good business for them, but not necessarily good for you. It's relatively easy to get a loan today, so think very carefully about adding to your mortgage, building that sun deck or extra room for example. You can only really start saving for the future once your mortgage is clear. An additional loan, no matter how small, can add years to the life of your mortgage.
  • Apart from the interest rate, be aware of other costs, such as application and establishment fees.
  • Be aware of the charges that may be incurred for lump sum and early repayments. This applies particularly to fixed interest loans. You may have to save the money in a separate bank account until you can transfer the sum to your mortgage without penalty.
  • Begin arranging the loan at the start of the house-buying process. Your ability to negotiate is reduced when you've just found the home of your dreams.
  • You don't have to have a mortgage with your own bank. There are many providers so shop around: "care where you invest, but not where you borrow."

If you can,

  • Increase your initial deposit,
  • Reduce the length of your mortgage,
  • Increase your payments, and
  • Reduce the interest rates or costs.

See the next page for some working examples.

Books to motivate and inspire your early mortgage repayment:

  • Save Money on Your Mortgage, by Martin Hawes, and
  • Your Mortgage and How to Pay it off in Five Years (NZ edition), by Anita Bell.


Banks will offer life and income protection insurances. We recommend that you contact the Shape of Money for an independent assessment of your needs. This will ensure that you get the right product with the right level of cover and all at the right price.

For a confidential, no-obligation insurance quote, please call the Shape of Money today on 0800 28 78 78.