[tigerlily]

Coming from America, I'm having a bit of a shock as I research home loans in NZ. I'm seeing the max term that I can fix an interest rate for is 5 years? And rates are in the 7.5 percent range right now, from what I see.

This seems a bit nerve racking to think that I will have to refinance in 5 years, with possible huge jump in my payments!!! I'm used to 30 year fixed rate as the standard.

Help! Is this true and if so, how do you deal with the fact that you might not be able to afford your own house?

[jubjub]

We got our loan with Kiwibank, it was 7.35 for two years, but I have since seen lower, they seem to be coming down.

The advantage of not them not letting you fix for so long is that it the rate goes down, you can remortgage after the two years and get a cheaper mortgae, of course it can work the other way, but you will have paid off some capital by then, so you wont have quite such a big mortgage in two years time.

the idea of not being able to afford our own house has actually never crossed our minds as we are so used to chopping and changing mortgages in the UK.

the mortgage interest rate may be higher but so is the investment interest rate, so it balances out roughly.

[Miffy]

On a variable mortage when the interest rates go up you grin and bear it, and try and tighten your belt to make ends meet.

Its also the norm in the UK, granted the current rates are around 3 - 5 % mark but I can remember 10 or so years ago when they were up in the low teens :o some poor people got a five year fixed rate at those rates!!

On the up side it does mean you benefit when the interest rates lower and you pay less for your house.

[Singel]

We got our mortgage at 6.95 for 2 years with National Bank, with 1 year free building/content insurance and $750 for our legal fees.
My colleague just got his mortgage at 6.90 for 5 years with Kiwibank.

In fact, we like the mortgage scheme here because we could have a chance to reduce the mortgage amounts with any savings or (windfall :D) in 2 years time.

It is important to shop around because the mortgage market here is very competitive. We got 3 independent mortgage brokers to do all the leg work for us and we just choose the best deal. Some banks pay commission to these brokers. BNZ do not use brokers.
:cheers

[Avalon]

also bear in mind that you can "split" your mortgage here. That is you can put some of it on a 2 year fixtd rate, some on a 5 year fixed arte, some on a revolving credit facility and so on. I know one person who has 5 mortgages!