Black & White Accounting

Phone: +64 6 834 0771

  • Home
  • Meet the Team
    • Kirsten Wise
    • Simon Hankins
    • Dave Cheetham
    • Karrie Stephens
  • Accounting
    • Key Dates
    • Tax Facts >
      • ACC Premiums
      • Depreciation Allowances
      • Entertainment
      • Fringe Benefit Tax
      • Gifting
      • Goods & Services Tax
      • GST & E-Commerce
      • Kiwisaver
      • PAYE on Salaries & Wages
      • Provisional Tax
      • Resident Withholding Tax
      • Tax Credits (formerly rebates)
      • Taxpayer Penalties
      • Working for Families Tax Credits
    • FAQ's
    • PaySauce
    • Accounting Testimonials
  • Insurance
    • Insurance Testimonials
  • Mortgages
    • Home Loans - Buying or Selling
    • First Home Buyers
    • Refinancing or Fixing
    • Debt Consolidation
    • Personal Loans
    • Interest Rate Options - Fixing or Floating
    • Types of Loans
    • The Costs
    • Mortgage Tips
    • Moving House Checklist
    • Mortgage Testimonials
  • Real Estate
  • Checklists
    • Individual Checklist
    • Business or Trust Checklist
    • Rental Checklist
    • Farming Checklist
    • Short Term Rental & AirBNB Checklist
  • News & Updates
  • Pay your invoice now
  • Contact
MENU
  • Home
  • Meet the Team
    • Kirsten Wise
    • Simon Hankins
    • Dave Cheetham
    • Karrie Stephens
  • Accounting
    • Key Dates
    • Tax Facts >
      • ACC Premiums
      • Depreciation Allowances
      • Entertainment
      • Fringe Benefit Tax
      • Gifting
      • Goods & Services Tax
      • GST & E-Commerce
      • Kiwisaver
      • PAYE on Salaries & Wages
      • Provisional Tax
      • Resident Withholding Tax
      • Tax Credits (formerly rebates)
      • Taxpayer Penalties
      • Working for Families Tax Credits
    • FAQ's
    • PaySauce
    • Accounting Testimonials
  • Insurance
    • Insurance Testimonials
  • Mortgages
    • Home Loans - Buying or Selling
    • First Home Buyers
    • Refinancing or Fixing
    • Debt Consolidation
    • Personal Loans
    • Interest Rate Options - Fixing or Floating
    • Types of Loans
    • The Costs
    • Mortgage Tips
    • Moving House Checklist
    • Mortgage Testimonials
  • Real Estate
  • Checklists
    • Individual Checklist
    • Business or Trust Checklist
    • Rental Checklist
    • Farming Checklist
    • Short Term Rental & AirBNB Checklist
  • News & Updates
  • Pay your invoice now
  • Contact

Interest Rate Options - Fixing or Floating

The common two interest rate options are ‘Fixed’ and ‘Floating’. You have the option of using one or mixing it up with both.
 
Fixed interest rate loans 
With a fixed rate home loan the interest rate you pay is fixed for a period of six months to five years. At the end of the term, you can choose to re-fix again for a new term or move to a floating rate.
 
Advantages:
  • You know exactly how much each repayment will be over the term.
  • Lenders often compete with fixed rate specials.
  • You can lock in lower rates if market interest rates are rising.
Disadvantages:
  • Fixed rates often have limits on how much you can lift repayments or make lump sum payments without paying charges.
  • If you take a long term, there is a risk floating rates may drop below your fixed rate.
  • If you choose to sell your property and/or break your fixed loan you may be charged ‘break fees’.
 
Capped rates are a variation where the interest rate can’t rise, but will drop if floating rates drop below the capped rate.

Floating rate (or variable rate) 
Lenders of floating rate loans will lift or lower the interest rate as interest rates in the wider market change, normally linked to the Official Cash Rate (OCR). This means your repayments may go up or down.
 
Advantages:
  • You have greater flexibility to make changes without penalty, such as paying off the loan early or changing the loan term.
  • It’s easier to consolidate other costlier debt into floating rate loans by borrowing more.
  • Right now, floating rates are lower than most fixed rates.
Disadvantages:
  • Floating rates have historically been higher than fixed rates – this isn’t the case now, but things can change.
  • When rates go up the repayments also go up, putting a squeeze on your budget.

A mix of fixed and floating 
You can split a loan between fixed and floating rates. This lets you make extra repayments without charge on the floating rate portion.
 
Splitting your loan can give you a balance between the certainty of a fixed rate and the flexibility of a floating rate. How much of your loan you have in each portion depends on which of these is more important to you.
Accountants & Tax Agents Institute of NZ logo
Picture

Get in touch

Phone: (06) 834 0771
Fax: (06) 834 0773
Email: [email protected]
Privacy Policy & Other Legal Documents

Come and visit

43 Carlyle Street
​Napier 4110

New Zealand

Send us something

PO Box 480
Napier 4110
New Zealand
Powered by 543 Website Design & Online Advertising