Struggling to make mortgage repayments? Tips to help

3 min read
4 August, 2023

Interest rates went from all-time lows to 15 year highs in the space of two years. If you’re struggling with your mortgage repayments you’re not alone - there’s help available and ways to make it easier. 

If you are a lucky household who managed to get into the property market in the last five years, chances are you’re either about to roll off lower interest rates onto higher ones - or you’re feeling the pinch already. 

And that’s fair enough. Less than two years ago many interest rates were in the high twos - as of August 2023 most are in the low to high sevens. Luckily there are plenty of things you can do to cushion the blow of high interest rates and there’s always help available if you’re struggling. 

Tips to reduce the impact of high interest rates

Shop around for a better deal

When it comes to your first mortgage or refixing (also known as refinancing) an existing mortgage, you don’t have to take the first offer of finance you receive. In fact, you may get a better deal if you shop around. Speak to a mortgage broker who may have access to special rates, jump on Google and see who’s offering the lowest rates or ask your current lender if they can do better (you never know). 

Prepare in advance for changes

When your interest rate is about to increase it can be a difficult change to manage. But the more you prepare, the smoother it’ll go. Before your rate increases, see if you can cut some expenses. Shop around for cheaper deals on energy, supermarket shops and consider cutting a streaming service if you’ve got more than one. 

You could also lobby your boss for a pay rise in line with inflation (or good performance!) or try and pick up new work if you’re self employed. 

Try these mortgage tricks

There is more than one way to skin a cat (and pay a mortgage). Here are a few tricks that could help with yours:

  • Try an offset account: an offset account is essentially a savings account that’s linked to your mortgage. You’ll only pay interest on your loan amount, minus whatever funds are in your offset account - which could save you hundreds of thousands a year if you’ve got savings.
  • Consider interest-only: if you’re struggling to make ends meet you could reduce your repayments by switching to an interest-only mortgage. This means you won’t be paying down the loan amount - you’ll only be paying interest (keep in mind this may mean you pay more interest in the long term and your mortgage will take longer to pay off).
  • Consolidate your debts: if you’ve got other, higher interest rate debts that are making it hard to make mortgage repayments - consider consolidating your debt. By rolling these into your home loan you may be able to reduce your interest payments and total costs.
  • Try interest rate averaging: if it’s almost time for you to refix your loan consider interest rate averaging. This is when you fix portions of your loan on different fixed periods - for example, you might have one third fixed for one year, one third fixed for two and a third fixed for three. This may help cushion you from sudden interest rate changes in future. 

Financial advice could also help you develop a plan to make ends meet, prepare a budget and so you can afford your expenses. You can find a New Zealand licensed financial adviser online or access free help via MoneyTalks.  

When you need a little extra help

If you can’t make ends meet with new, higher interest rates there are plenty of options. Your bank wants to keep you as a customer so that you can continue paying your mortgage so they’ll usually be flexible to help you do that. 

So let your bank know right away that you’re struggling. You could suggest extending your loan term to 30 years temporarily, which will reduce the size of your repayments (but will also mean paying more in the long term). 

As covered above, another option is to switch to interest-only payments. Your repayments will be smaller but you won’t see your principal (loan amount) reducing and you will pay more in the long run - so this is only a short-term solution. Another option is to ask for a short break from payments - again this will mean paying more in the long run, but it could help you get through a tough spot. 



This Struggling to make mortgage repayments? Tips to help, is general information only. The views and opinions expressed do not necessarily reflect those of the FSC. It is not intended to constitute legal or financial advice and does not take your individual circumstances and financial situation into account. We encourage you to seek assistance from a trusted financial adviser, legal or other professional advice. 


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August 2023

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