Dealing with your lender

Before your fixed rate expires, shop around. Lenders will often offer discounts on their advertised rates to win business or to keep a good customer. If you receive a good offer from another lender, your existing lender may match it. Make sure you consider any extra fees and charges in switching.

Can't do the shopping around yourself? Consider using a mortgage broker to do it for you. Members of the New Zealand Mortgage Brokers Association follow a code of ethics. Brokers are paid in commission from the loans they arrange, although some may charge the borrower a fee in complex cases.

If possible, reduce your borrowing. Look at selling some assets or using savings to pay off mortgage debt. Repaying debt gives you one of the highest risk-free returns available because of the interest you save - but check whether there are any early-repayment penalties on your loan. A revolving line of credit (RLOC) mortgage, where you can pay off debt quickly but can also borrow quickly if necessary, may be worth considering. But be aware that RLOCs have a downside - see Mortgage strategies.

Look at extending the term of your loan. This will reduce your monthly payments. But it also means you'll end up paying more interest in the long term - unless you pay off lump sums or reduce the term of the loan at some later date.

You can reduce your overall payments by switching to interest-only payments (for part of the loan or all of it).This is only a short-term fix, though. When you're no longer paying off principal, your loan's not getting any smaller - which makes you vulnerable to future interest-rate rises. Aim to resume principal payments in the future.

Some lenders allow you to temporarily reduce your mortgage payments or take a break from payments. But you will continue to be charged interest and this may be added to the loan. Sort out with your lender how you'll make up the missed payments.

Credit-cards and personal-loan debt is usually more expensive than the interest on your mortgage. So look at reducing your overall loan repayments: consolidate other debts and add them to your mortgage. But take care not to increase your borrowings after you do this.