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The most flexible of our home loans, the revolving credit home loan is like a big overdraft. You need to be disciplined, as there are no set repayments and you can withdraw or deposit money up to your credit limit whenever you like.
Benefits at a glance
Interest rates are subject to change.
Useful if you have irregular income, as there are no fixed repayment periods
Variable interest rate, so if interest rates go down you pay less
Draw down, repay and redraw money within your credit limit as often as you need to
Save on interest by putting your pay into this account
You might save on interest if you’re building or renovating over a longer period of time, as you can draw on money as you need it, instead of topping up your loan in one chunk
Could suit you if you’re good at budgeting and you’re not likely to be tempted to keep maxing out your available credit.
How it works
Revolving home loans work like a big overdraft. Your loan becomes your everyday account, so money flows in and out of your loan balance as you get paid and as you spend and pay bills.
Unlike more traditional home loans, there are no set repayments on set dates. You can make repayments whenever you like, for as much as you like.
You can withdraw money again later if you need it (up to your credit limit) – so before getting this type of home loan, ask yourself if you can resist the temptation of dipping into the available credit.
The idea is to save on interest by keeping your revolving credit balance as low as possible. Interest is calculated daily, so try to keep as much money in the account as you can to keep the interest charges as low as possible.
One way of doing this is to use your credit card for your day-to-day spending. This way, instead of money coming out of your revolving credit account daily, it sits in your account longer, coming out in one go when you pay your credit card.
If you’re going to do this, then set up a direct debit from your revolving credit account to pay off your credit card each month. If you pay your credit card bill in full before the due date each month, you won’t pay any interest on purchases.
Watch the video below to understand the basics of a revolving credit home loan.
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Is it for you?
Generally you'll require 20% and this kind of set up won’t suit everybody. Done well, you should save money in interest over the years. But, if it's not managed well, the loan balance won't get paid off.
Only opt for this kind of loan if you’re confident in your budgeting skills and know you won't be tempted to max out your credit limit on unnecessary spending.
Mix it up
For more certainty about your repayments and the rate you’ll pay, you could put some of your loan on a fixed rate and some on revolving credit.
Talk to a home loan expert - we're here to help
If you want to chat about your home loan options, get in touch with one of our home loan experts.
Our Mobile Mortgage Managers can meet you wherever suits you, or if you’d prefer to come into a branch you can make an appointment with one of our Banking Consultants. Our home loan team is also available by calling 0800 000 654 between 8am and 6pm, Monday to Friday.
Get the right home loan for you
Interest rates are subject to change.
Standard terms and conditions
The calculators should be treated as a guide only. They don't take into account all of your individual circumstances and are not financial advice.
Displayed interest rates subject to change. Kiwibank’s lending criteria, terms and conditions and fees apply.