Variable rates float up and down with the market. At Kiwibank, we make a point of keeping our variable rate (also known as a floating rate) as low as possible.
Capped rate loans are great if you think interest rates are going to rise, but you don’t want to be locked into a fixed rate.
They work the same way as standard variable rate loans – the rate floats up and down with the market. However, they have a pre-set cap that the interest rate can’t rise above.
The cap applies for a certain length of time, usually one year. After that, your rate will be whatever the variable rate is at that time. This could be above or below your pre-set cap.
For example: You take a home loan with a variable interest rate at 6%p.a. and select the capped rate option. The capped rate at that time is set at 7%p.a. for one year. This means you’ll start paying off your loan at 6%p.a., and the rate you pay will never go above 7%p.a. during the year.
Then interest rates rise gradually up to 7%p.a., so your rate rises up to that too. If rates continue rising to 8%, the rate you pay during that year stays at 7%p.a., because that’s your pre-set cap. Then before the year’s up, the variable rates start falling again, down to 5%p.a., so you’ll now pay 5%p.a. interest on your loan.
At the end of the year, when your pre-set limit expires, your interest rate will be whatever the variable rate is at that time.
With our offset mortgage, you offset the balance of your savings and everyday accounts against your mortgage, and only pay interest on the difference. You can link up to eight accounts – including accounts from your partner, parents and children – and you can use all your linked accounts as usual.
Because you’re only paying interest on part of your home loan, you can save thousands and take years off your mortgage. Find out more >
Revolving home loans (also known as line of credit home loans) are variable interest rate loans that work like a large overdraft. You can put money in at any time to reduce the amount owing, then withdraw as much as you need (up to the loan limit).
For example – you could have your income direct credited to reduce your home loan, and then withdraw just what you need by cheque or through a Kiwibank debit card. You can also have your household bills direct debited from this account.
A revolving loan can save thousands of dollars in interest and help you be mortgage free years quicker, as long as you manage it carefully.
If you're ready to switch your home loan to us, you could save up to $1,200 with our free refinancing package*. And with our easyswitch service, we'll help close your old accounts and set up your new ones, and help redirect all your existing direct debits, bill payments, automatic payments – whatever you need.
*The refinancing package is free if your loan is over $50,000, less than 80% of the current market value of the residential properties provided as security, transferred to Kiwibank without changing who owns the properties and secured by no more than two securities, if the refinancing documentation is not signed under a power of attorney and if the refinancing does not form part of a series of same day transactions. If you are using an apartment, townhouse or leasehold property as your security, you will need to obtain (and pay for) a registered valuation. The refinancing package is not available for business banking purposes.
Interest rates subject to change. Rate not available for business banking purposes.