10-Year Interest-Only Mortgage in NZ: Should You Take It?

What Property Investors in New Zealand Need to Know 

Have you heard the news? ANZ has introduced a 10-year interest-only loan for property investors in New Zealand. Yes—a full decade of interest-only payments. For many investors, this changes the game in terms of cash flow planning, loan structuring, and long-term strategy. 

 

What Is an Interest-Only Loan? 

An interest-only mortgage means you only pay the interest on the loan for a set term, without repaying any principal during that time. 

Two Main Benefits for Property Investors 

1. Improved cash flow – Lower monthly repayments mean less pressure on rental returns. 
2. Tax efficiency – In New Zealand, mortgage interest on investment properties is generally tax-deductible, so larger interest payments can reduce taxable income. 

Most New Zealand interest-only loans only last 5 years. ANZ now offering 10 years is a notable shift in the property lending market. 

What Makes ANZ’s Loan Different? 

The biggest difference isn’t just the 10-year interest-only period—it’s how ANZ calculates borrowing capacity. 

Even though the interest-only term runs for 10 years, ANZ still uses a 5-year principal-and-interest assessment to determine your affordability. 

Why This Matters for Investors 

In most banks, a longer interest-only term shortens the remaining principal repayment period, resulting in higher monthly repayments and reduced loan size. But ANZ’s method avoids this problem—giving you both longer cash flow relief and maximum borrowing power. 

It also signals ANZ’s confidence in the New Zealand property market and their intent to attract more investment property clients. 

Is This Loan Right for You? 

Not necessarily. While this is a great tool for some, it’s not for everyone. 

Things to Consider 

1. How long do you keep your loans? Most property investors refinance every 3–4 years, meaning you may not need a 10-year term. 
2. Future borrowing power – Some lenders may be cautious if you’ve already spent a decade on interest-only repayments without reducing the principal. 

Who Might Benefit Most? 

1. Loyal ANZ Customers 

If you’re already with ANZ and happy to stay, the longer term can offer stability and better cash flow. 

2. One-and-Done Investors 

For those planning to buy one investment property and hold, this may simplify finances and maximize rental yield. 

Final Thoughts 

ANZ’s 10-year interest-only investment loan is bold, flexible, and potentially powerful—but only in the right hands. It’s vital to align it with your investment strategy, loan structuring, and long-term financial goals. 

Wondering if it suits your situation? 

Talk to us at Prosperity Finance—we’ll help you assess whether this structure fits your goals and how it compares to other New Zealand property loan options. 

Prosperity Finance – More thorough plans, more thoughtful advice, more secure cooperation. 

FAQs 

What is the standard interest-only period in New Zealand? 

Most banks offer 5 years. ANZ is now offering 10 years, which is rare among New Zealand interest-only loan options. 

Will this affect my future borrowing capacity? 

In some cases, yes. While ANZ uses a 5-year assessment model, other lenders may reduce your future loan size based on remaining principal repayment years. 

Is the interest still tax-deductible? 

Yes—for investment properties, interest is typically tax-deductible in New Zealand. However, tax rules can change, so always seek personalised advice. 

Disclaimer: The content in this article are provided for general situation purpose only. To the extent that any such information, opinions, views and recommendations constitute advice, they do not take into account any person’s particular financial situation or goals and, accordingly, do not constitute personalised financial advice. We therefore recommend that you seek advice from your adviser before taking any action.