This information is for you if you’ve received a letter(s) titled ‘We’re changing the terms of your home loan(s)’. Please note, you’ll get one letter for any home loan(s) that you hold individually and/or jointly where changes are required to that home loan. You’ll also receive a separate letter for any loans held by each entity type, e.g. sole trader, partnership, company, or trust. Here’s some more information about these changes.
Topics
- Updated Home Loan Facility Master Agreement (FMA)
- Transferring from Classic to Standard
- Interest Rate Types (‘Residential Owner Occupied’ and ‘Residential Investor’)
- Additional questions
Updated Home Loan Facility Master Agreement
Why are my loans being moved to the June 2024 Facility Master Agreement?
There’s content that is no longer relevant in the Facility Master Agreement (FMA), which has been removed from the June 2024 version. All loan agreements dated on or after 17 June 2024 are already on this version.
What are the key differences between the old versions and the new June 2024 version of the Facility Master Agreement?
Depending on which Facility Master Agreement (FMA) you are moving from, the differences between your current FMA and the June 2024 FMA will be as follows.
If your current FMA is dated May 2024, the changes are the removal of wording related to:
- Tailored in clause 14
- BNZ Advantage in clause 15.
If your current FMA is dated December 2023, the changes are the removal of wording related to:
- Tailored in clause 14
- BNZ Advantage in clause 15; and
- Redraw in clauses 14.11 and 14.12.
What is redraw?
If your loan is on the December 2023 version of our Facility Master Agreement (FMA), in clauses 14.11 and 14.12, you were able to apply to ‘redraw’ your loan.
This means, if you had a term home loan and were paying it down faster than you needed to, you could have applied to re-borrow some of these funds.
In your new June 2024 FMA, we’ve removed references to ‘redraw’ and updated the clause numbering to reflect this change. This means you’ll no longer be able to apply to redraw an amount under a loan.
There are still other ways to access equity in your home. You can talk to us about your financial goals, and we’ll help find the best option for you. You can also find more information on our home loans here. All home loans are subject to our lending criteria (including minimum equity requirements).
What happens to my loans that aren’t moving to the June 2024 Home Loan Facility Master Agreement?
If you have a loan that’s not moving to the June 2024 version of the FMA, it will stay on the current version, and we’ll be in touch again when we’re ready to move these home loans onto the new FMA.
Only loans whose account numbers are included in the ‘moving to the June 2024 Home Loan Facility Master Agreement’ section of the table at the top of the letter will be moving to the June 2024 FMA at this stage.
Make sure you read your letter carefully as other sections of the letter may apply to any loan which hasn’t yet been moved to the new FMA. Any home loan agreements dated on or after 17 June 2024, or any home loans included in the letter sent in October 2024, will already be on the June 2024 FMA.
Will I need to sign anything?
No. We’ll automatically make the changes on 22 March 2025.
Transferring from Classic to Standard
Why am I being moved off Classic home loans?
As part of our ongoing work to simplify our home loans, we’ve reduced the number of home loan types available. As a result, our Classic home loan was removed from offer on 19 September 2024.
Since Classic home loans are no longer available, we’ll be transferring these loans to our Standard home loan. Standard loans come with the benefit of the 5% threshold, which Classic loans don’t have.
We’ve also reduced our advertised Standard home loan base rates to match our Classic home loan rates.
Will my interest rates be impacted by these changes?
No. Your interest rates will not increase as a result of these changes. However, variable interest rates are always subject to change at any time.
How can BNZ move my home loan from Classic to Standard?
Clause 4.4 of the Home Loan Facility Master Agreement (FMA) says that if your type of home loan is no longer available, we can choose to transfer you to another type of home loan.
What if I don’t want to move to a Standard home loan?
If you don’t wish to move to our Standard home loan, you need to contact us by 20 March 2025 to discuss your options. Otherwise, on 22 March 2025, your impacted loan(s) will automatically be moved to a Standard home loan. You can choose to transfer to another available home loan type.
If you choose to end your agreement or repay or refinance your home loan during a fixed rate period, you may have to pay an early repayment charge. If you do this while on a Classic home loan, you won’t receive the benefit of the 5% threshold.
How does the 5% threshold on Standard home loans work?
We will not charge you an early repayment charge if the effect of all early repayments you make in any consecutive 12-month period within a fixed rate period is less than or equal to the ‘5% threshold’. We calculate the 5% threshold as 5% of the outstanding principal amount at the start of the fixed rate period. The first 12-month period starts on the first day of the fixed rate period.
In addition, the early repayment charge is only payable to the extent that the effect of the early repayments is more than the 5% threshold.
As a simplified example, for a 1-year fixed rate Standard home loan with a balance of $400,000 at the beginning of the fixed rate period, the 5% threshold would be $20,000. An increase in repayments of $1,000 a month would be $12,000 in that consecutive 12-month period. Since $12,000 is under the $20,000 threshold, there wouldn’t be any early repayment charges for this particular 1-year fixed rate period.
However, an increase of $2,000 a month would be $24,000. This is over the 5% threshold of $20,000, so an early repayment charge would apply on the amount above the 5% threshold.
If you choose to end your agreement or repay or refinance your home loan during a fixed rate period, you may have to pay an early repayment charge. If you do this while you’re still on a Classic home loan you won’t receive the benefit of the 5% threshold.
If you’re registered for Internet Banking or the BNZ app, you can see whether an early repayment charge (which takes the 5% threshold into account) may apply by clicking your home loan account and selecting either ‘change your regular repayments’ or ‘make a lump sum payment’.
How to change your home loan repayments
How to make a lump-sum payment
More information on the early repayment charges and the 5% threshold
Can I still increase my repayments at the time I re-fix my home loan and would this use some of the 5% threshold?
Any increase of payments that take effect in a fixed rate period will count towards the 5% threshold. However, you may choose a higher repayment amount when you’re re-fixing your loan, and that higher repayment amount will take effect on the same day your new fixed rate takes effect. Where the higher repayment amount takes effect on the same day as the new fixed rate begins, this won’t count towards the 5% threshold.
If you’re using any of our digital tools, such as re-fixing your home loan on Internet Banking, we’ll always let you know if there’s an early repayment charge (ERC) to pay. The ERC will always take into account the 5% threshold.
You can check to see whether an early repayment charge may apply by logging into Internet Banking or the BNZ app, selecting your home loan and clicking on ‘change my repayments’ or ‘make a lump sum payment’. The early repayment calculation will take into account the 5% threshold if you’re looking to increase your repayment or make a lump sum payment during a fixed-rate period.
Do early repayment charges apply to loans on variable rates?
No, additional payments can be made without early repayment charges at any time while on a variable rate. If you are moving from a Classic variable home loan to a Standard variable home loan, you will still be able to make additional repayments without having to pay an early repayment charge.
Aren’t Standard fixed interest rates usually higher than Classic fixed interest rates?
As part of simplifying our home loan products, on 20 August 2024, we lowered our Standard home loan interest rates to match those of our Classic interest rates.
Base Interest Rate Types (‘Residential Owner Occupied’ and ‘Residential Investor’)
Will my interest rate change because of the removal of these base interest rate types?
No. Removing Residential Investor (RIN) and Residential Owner-Occupied (ROO) will not increase your interest rates in any way.
Will the removal of base interest rate types affect the ability to offset my mortgage with my TotalMoney home loan?
No. Removing RIN and ROO won’t affect your ability to offset your mortgage if you have a TotalMoney home loan.
What is the base interest rate?
Previously we had two base interest rate types (Residential Investor (RIN) and Residential Owner-Occupied (ROO)) depending on how a loan was secured. RIN and ROO rates have largely been the same for some time now, which is why they’re being removed. They have not been included in new loan agreements since 5 September 2024.
There is now only one base interest rate for each type of BNZ home loan:
- For Standard home loans, this is the base interest rate for Standard Housing Loans, which may be variable or fixed.
- For Rapid Repay home loans, the base interest rate is the variable interest rate for Rapid Repay Housing Loans.
- For Mortgage One home loans, the base interest rate is the variable interest rate for Mortgage One Housing Loans.
- For TotalMoney home loans, the base interest rate is the variable interest rate for TotalMoney home loans.
How will I know what the base interest rate type is for each of my home loans?
You can find the base interest rate for each of your home loan types in the ‘Changes to the letter(s) of advice’ documents included with your letter.
Will you still collect residential property occupancy information (i.e. whether a property is owner-occupied or investment)?
Yes, this is a regulatory requirement.
Will minimum equity requirements still apply to loans secured by a residential owner occupied, or residential investment property?
Yes, minimum equity requirements may apply.
Typically, lending secured against an owner-occupied property will need a 20% deposit, while lending secured against residential investment properties currently requires a 30% deposit. A low equity interest rate premium may apply for deposits less than 20%.
See more information about deposits and loan to value ratios
Additional questions
Why does my letter not cover all my loans?
You’ll get one communication for any impacted home loan(s) that you hold individually and/or jointly. You’ll also receive a separate communication for any loans held by each entity type, e.g. sole trader, partnership, company, or trust. You may have already received a letter from us in October 2024 about some of your other home loans.
You will only see your home loans in this letter that haven’t already:
- Moved onto the June 2024 Agreement,
- Been switched from a Classic home loan to a Standard home loan,
- Had the base interest rate types of ‘Residential Owner Occupied’ and ‘Residential Investor’ removed.
If you are concerned that you have a loan not covered by the above reasons, please contact us and we can discuss your specific loan details and why it may not be included in these changes.
What if I make a change to my home loan(s) on or after 22 March 2025?
Any change that you make will be processed in the usual way. The changes detailed in your letter will be effective on 22 March 2025. This means any amendments you make to your home loan(s) after this date will take these changes into account.
What are the other changes BNZ is making?
As part of simplifying our home loans, we’ve made several changes. Some of these include:
- Updates to our Facility Master Agreement (FMA).
- Notifying you that interest will always be charged based on the actual number of days in any repayment period. This is referred to as ‘daily interest charges’ in the Home Loan FMA – see clause 14.10(a). These changes are being made over time, so you may have already heard, or are yet to hear, from us about these.
We’re also planning to remove the Tailored feature from our home loans.