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Why one big loan could be costing you more than you think

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3 Years with the Same Bank – Here’s What They Were Missing

A client came to me after sitting with the same bank for over 3 years. They weren’t unhappy — they just wanted to know if they could do better.

Here’s what their situation looked like:

  • Loan: $747,000
  • Equity position: under 80%
  • Savings: $50,000 sitting in a standard account

After shopping the market, we found a lender offering $6,723 cash back and some of the most competitive rates available right now.

We refinanced them across. The cash back covered legal fees, and real money went back in their pocket from day one.

But the structure we put in place is what I really want to talk about.

The Split Loan Approach – and Why Most Kiwis Have Never Heard of It

A lot of New Zealanders put their entire mortgage on one rate and leave it there. One big loan, one fixed term, fingers crossed the rate is good when it rolls over.

The problem? If rates move against you at renewal, your entire loan gets hit.

For this client, we split their $747,000 across three portions:

Portion 1 — Fixed (longer term) Certainty. They know exactly what this portion costs, no surprises.

Portion 2 — Fixed (shorter term) This one rolls over sooner, giving them a chance to reprice part of the loan without being locked in on everything.

Portion 3 — Revolving Credit This is where their $50,000 in savings lives. A revolving credit works like an overdraft — your savings sit against the loan balance, and you’re only charged interest on the difference. $50k offsetting the balance means they’re saving on interest every single day, while still having full access to those funds if they need them.

Why Does This Matter?

Splitting your loan across different fixed terms means you’re never fully exposed when rates change.

If rates drop, part of your loan is coming off fixed soon and can be repriced. If rates rise, you’ve got other portions locked in at lower rates. It’s one of the simplest ways to manage interest rate risk — and most people have never been shown it by their bank.

Why? Because banks tend to keep things simple. One loan, one rate, one renewal conversation. It’s easier for them — not necessarily better for you.

Is Your Mortgage Working as Hard as It Could Be?

If your mortgage is sitting on a single rate and you haven’t reviewed the structure in a while, it’s worth a conversation.