Changes to the way we calculate interest on some Classic and Standard home loans

Effective from 5 May 2024

We’re contacting all existing customers on our Classic and Standard home loans with weekly or fortnightly repayments. If you’ve received a letter, there’s nothing you need to do – but here’s some more information about the change.

Weekly or fortnightly repayments

If you make weekly or fortnightly repayments, we calculate interest based on the number of days in those repayment periods (7 or 14 days respectively). This isn’t changing.

Your interest rate, number and amount of repayments, and final repayment are not changing.

If you change to monthly repayments

The only thing that’s changing is that if you switch to monthly repayments in the future, interest will be calculated based on the number of days in that repayment period.

Previously, we used ‘periodic interest charges’ for monthly repayments which means the interest was ‘smoothed’, or evenly divided, across the 12 months in a year. To calculate that, we multiplied your daily interest charges by the average number of days in a month.

If you change to ‘interest-only’ monthly repayments

If you change from weekly or fortnightly repayments to interest-only monthly repayments during an interest-only period in the future, you’ll see a difference in the amount you pay each repayment period. This is because interest will be calculated based on the actual number of days in each month. So your interest-only payments would be higher in months with 31 days like October, and lower in months with 30 days like April.

If you change to ‘principal and interest’ monthly repayments

If you change from weekly or fortnightly repayments to monthly repayments in the future, and pay principal and interest, your total repayment amount will still be the same each month. 

Other home loans

If you have a Classic or Standard home loan on monthly repayments that started before before 5 May 2024, we’ll be contacting you separately.

TotalMoney, Rapid Repay, and Mortgage One home loans have always used ‘daily interest charges’ so those won’t change.

Why we’re making this change

We’re making this change to ensure our technology continues to evolve to meet the needs of our customers.

It’s important to let you know about any changes we make to your home loan documents, even if it doesn’t affect you right now. This is so that you’re aware of how we calculate interest, if you choose to switch to monthly repayments in the future.

If you have questions about this change, or about other changes to our products, contact us on 0800 275 269. If you’re a business customer, you can contact us on 0800 269 763 or talk to your BNZ banker.