Fixed or Floating Mortgage Rate Calculator

Switching to a fixed rate can save you hundreds of dollars every month in lower mortgage costs. How much can switching to a fixed rate mortgage save you? Find out in seconds with MoneyHub's Fix or Float calculator.

Know this:
  • When you first take out a loan, most of your monthly payments go toward paying interest rather than principal.
  • The lower the interest rate, the more money you can put towards the principal and the lower the cost of your loan overall.
  • Switching to a fixed interest rate is usually easy and low in fees. If you're on a variable rate there is no downside to shopping around for a lower interest rate. 
Fixed or Floating Interest Rate Calculator
Switch to a Fixed Rate:
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Difference per month:
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Fixed and Floating Mortgage Rate FAQs

To help you understand the differences between the interest rate options in a mortgage, we have answered a number of frequently asked questions below.

What is the difference between fixed and floating/variable mortgages?

To answer this, we have explained fixed and floating mortgages below.

How does a fixed mortgage rate work?

A fixed interest rate mortgage does what it suggests it will - it fixes the interest rate for however long the mortgage term is for. In most cases, this will be between 6 months and 5 years. During this time the mortgage repayment is the same each month, as the interest rate is agreed upfront and will not change even if interest rates in the market move up or down.

How does a floating or variable mortgage rate work?

A floating (or variable) interest rate mortgage has unique characteristics:
  • The interest rate moves up or down with the market - if interest rates increase, you will pay a higher monthly mortgage repayment, and vice versa. This can complicate budgeting for a mortgage.
  • The current interest rate offered will usually be higher than current fixed-rate mortgage offers - you will usually see the variable rate 1% or 2% higher than the fixed interest offers.
  • The mortgage has no contracted term - in most cases you can switch to a fixed rate mortgage without any penalty. 
  • You won't be penalised if you overpay  - unlike fixed rate mortgages, you can overpay to bring down your mortgage and you won't be charged an 'over-payment penalty' or similar. 

What are the advantages of a fixed rate mortgage?

If you are able to get a lower interest rate than your existing deal, switching to a fixed interest rate on your mortgage will most likely save you money every month. Banks won't offer the option automatically so you'll need to do your homework to know the terms and if any fees will be charged. 

The top reasons to switch to a fixed interest rate are:
  1. To pay less every month with a lower interest rate. Lowering your mortgage's interest rate can reduce your monthly payment if the repayment term (duration) remains the same.
  2. There are suggestions in the media that interest rates will rise. By fixing an interest rate, you can be protected from higher interest rates from 6 months to 5 years. 
  3. To provide certainty in your budget. A fixed interest rate mortgage gives you certainty and may save you money overall depending on what happens with interest rates.
  4. To get a better mortgage if your personal situation has improved. If you've had a significant payrise or some other fortune and have some savings, you can pay into your mortgage while it is on a variable interest rate. In most cases, you won't pay any early repayment fees. You can then switch to a fixed rate mortgage with less owing overall to get the best possible mortgage deal.

Can a fixed rate mortgage increase?

No - for the term of the mortgage, be it 6 months, 1 year or even 5 years, you will pay the agreed interest rate. It's only after that term that you will pay the floating rate, which could be higher or lower than the fixed interest rate you originally signed up for.

Can a floating mortgage rate decrease?

Yes - the Reserve Bank of New Zealand can drop the government interest rate at any time if there is an economic need, meaning banks will drop their interest rates. Also, competition among banks may mean that your current mortgage is less competitive than another banks' offer.

How do you calculate fixed mortgage payments?

Fixed rate monthly mortgage payments are calculated by using the the principal amount (i.e. the amount you have borrowed), the monthly interest rate (to find this you divide the annual interest rate by 12) and the term of the loan (in months). The longer the term of the loan, the lower the monthly mortgage payment will be, but you will pay more interest overall. Our mortgage calculator gives you a weekly, monthly and annual mortgage payment estimate.

Is a fixed rate mortgage better than a variable?

It depends. If you want the certainty of fixed mortgage payments, then a fixed rate mortgage could be the best option. Alternatively, if you believe interest rates will fall and want to fix at a lower rate than what is currently being offered, a variable interest rate may be a good idea.