This information is for you if you’ve received a letter/email titled ‘We’re transferring your Classic home loan(s) to Standard home loan(s)’. Here’s some more information about these changes.
Topics
- Transferring from Classic to Standard
- How does the 5% threshold work?
- Base Interest Rate Types (‘Residential Owner Occupied’ and ‘Residential Investor’)
- Updated Home Loan Facility Master Agreement (FMA)
- Additional questions
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, since 19 September 2024, no new Classic home loans have been available.
Since Classic home loans are no longer available, we’ll be transferring Classic 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 base 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 31 October 2024 to discuss your options. Otherwise, on 2 November 2024, your impacted loan(s) will automatically be moved to a Standard home loan. You can’t opt out of this change after 31 October 2024, but as always, 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
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’)
What are RIN/ROO base interest rate types and why are you removing them?
From 2 November 2024, Standard home loans will only have one type of base interest rate, which is the base interest rate for Standard Housing loans, which can be either fixed or variable.
Currently, we have two base interest rate types, RIN and 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.
Learn more about RIN and ROO rate types
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 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
Updated Home Loan Facility Master Agreement (FMA)
Why are my loans being moved to the June 2024 Facility Master Agreement?
Content that is no longer relevant in the Facility Master Agreement 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 differences between my May 2024 Facility Master Agreement and the new June 2024 Facility Master Agreement?
The difference between your current May 2024 Facility Master Agreement (FMA) and the June 2024 FMA is the removal of wording related to:
- Tailored in clause 14
- BNZ Advantage in clause 15
- Flybuys in clause 16.
Why aren’t all my loans moving to the June 2024 Home Loan Facility Master Agreement?
Any home loan agreements dated on or after 17 June 2024 will already be on the June 2024 FMA.
Will I need to sign a new agreement?
No, you won’t need to sign a new agreement. We’ll automatically make the changes on 2 November 2024.
Additional questions
What changes are being made to my home loan terms and conditions?
As part of transferring from Classic to Standard, there are several changes being made to your home loan’s Terms and Conditions:
- With a fixed-rate Standard home loan, you’ll receive the benefit of the 5% threshold. You can read more about the 5% threshold above and in clause 9.8 of the Home Loan Facility Master Agreement (FMA).
- The removal of ‘base interest rate types’, known as Residential Investor (RIN) and Residential Owner-Occupied (ROO). From 2 November 2024, Standard home loans will only have one type of base interest rate, which is the base interest rate for Standard Housing loans, which can be either fixed or variable.
- Unless you are already on the June 2024 version of our FMA, we will be moving your loan onto our updated June 2024 FMA.
Why are my loans excluded from certain changes set out in the letter if I make a change between 30 September and 1 November 2024 (inclusive)?
We’re giving you advance notice of the changes. If you take one of the actions outlined in your letter during the notice period between 30 September and 1 November (inclusive), that could result in you receiving information from us that is inconsistent with the changes happening on 2 November 2024.
What if I make a change to my home loan(s) on or after 2 November 2024?
Any change that you make will be processed in the usual way. The changes detailed in your letter will be effective on 2 November 2024. This means any amendments you make to your home loan(s) after this date will take these changes into account.
Why does my letter/email 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.
There will also be home loans that are excluded from these changes for now. Loans excluded include:
- Loans where you’ve signed your contract but haven’t drawn down the loan as of 30 September 2024.
- Most loans that are scheduled to end before the changes take place on 2 November 2024.
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 have also made changes due to other events, such as the closure of Flybuys.