If you’ve been hit with a sudden financial shock — a job loss, a serious illness, a drop in income — a mortgage holiday can offer immediate breathing room by pausing your home-loan repayments. But it isn’t free, and it isn’t always the best option. This guide explains how a mortgage holiday actually works, why it can quietly make your loan more expensive, the cheaper alternatives worth exploring first, how to apply, and where to get free help. It’s general information, not financial advice.
What a mortgage holiday really is
Hatch at a glance
Details change as platforms evolve — confirm current information on hatchinvest.nz before deciding.
Is it the right move for you?
A mortgage holiday can genuinely be a lifeline — but only for the right situation. It could make sense if you’re facing a temporary income disruption with a clear path back to full repayments within three to six months, you need significant cash-flow relief that other options can’t provide, and you understand and accept the long-term cost of capitalised interest. It’s likely the wrong choice if your hardship is long-term or permanent, you don’t have a clear route back to your previous income, or you could instead manage a reduced payment (like interest-only). Because it’s the most expensive form of relief, it should be a last resort — which is why the alternatives below matter.
Cheaper alternatives to explore first
Hatch fees
As at 2026. Fees change, so confirm the current figures on hatchinvest.nz.
| Fee | What it is |
|---|---|
| Brokerage per trade | A flat US$3 to buy or sell up to 300 shares (then about US$0.01 a share above that). Kids Accounts pay US$0.50. |
| Currency exchange | Around 0.5% when converting NZD to USD (or back). You can deposit USD directly to avoid the FX fee on the way in. |
| Account / custody fee | None — no ongoing monthly or platform fee. |
| US dividend withholding | Not a Hatch fee, but the US deducts 15% on dividends to NZ investors (with a W-8BEN); you can credit it against your NZ tax. |
Because brokerage is a flat US$3 rather than a percentage, Hatch is relatively cheaper on larger US orders and relatively dearer on very small ones — a US$100 trade is about 3% in brokerage alone.
Our home loans guide covers mortgage structures in general, the home loan calculator guide can help you model different repayments, and if high-interest debt is part of the squeeze, our debt consolidation guide explains that option.
Qualifying, and how banks decide
A mortgage holiday isn’t an automatic right — it’s a hardship arrangement your lender offers at its discretion, approved case by case. To be considered, you’ll generally need to show genuine, temporary financial hardship (redundancy, a major income cut, serious illness or injury, or a relationship breakdown), a solid repayment history before the rough patch, and — importantly — enough equity in your home. Because a holiday increases your loan balance, a bank is more cautious if your loan-to-value ratio is already high, since capitalised interest could push you toward negative equity. All the big banks (ANZ, ASB, BNZ, Westpac, Kiwibank) have dedicated hardship teams; the standard pause is typically capped at around three to six months, and most banks now require a gap (often 12 months) between deferrals.
Applying, and what it means for your credit
Reference sources
- Gem by Latitude — Gem Visa card (rates and fees): gemfinance.co.nz
- Financial Markets Authority — consumer credit and the CCCFA (regulator from 1 July 2026): fma.govt.nz
- Consumer NZ — credit cards and interest-free finance: consumer.org.nz
- MoneyTalks — free financial mentoring (0800 345 123): moneytalks.co.nz
- Centrix — check your credit score and file: centrix.co.nz
- Sorted (Te Ara Ahunga Ora Retirement Commission) — debt and borrowing guides: sorted.org.nz
A few extra things worth knowing: if you have mortgage repayment or income protection insurance, tell your insurer before applying, as a payout may affect whether the bank grants a holiday (and altering the loan without telling them could complicate a later claim). On a fixed-rate loan, interest accrues at your current fixed rate during the pause, but when the fixed term ends your larger balance rolls onto whatever rates apply then — so if rates have risen, you could face a bigger loan and a higher rate. And once you’re back on your feet, making extra repayments is one of the best ways to claw back the cost — just check any annual overpayment limits on a fixed-rate loan. You can budget the recovery with our budget planner guide.
The bottom line
A mortgage holiday is a powerful but costly tool — real relief when you’re in acute, temporary distress, but deferred, more-expensive debt rather than free money. For most people, a cheaper option like interest-only payments or a term extension does the job with far less long-term damage, and a formal hardship variation gives you a legal right to have your request considered. Whatever you’re facing, the most important steps are the same: act early, talk to your bank’s hardship team before you miss a payment, and get free, confidential help if you need it — you don’t have to navigate this alone.
Disclaimer: This article is general information about mortgage holidays and hardship options in New Zealand, not financial advice. A mortgage holiday increases the total cost of your loan through capitalised interest and is usually the most expensive relief option — consider the alternatives, and confirm the specific terms, costs and credit-reporting practices with your own lender before deciding. Rates, figures and bank policies vary and change over time. If you’re struggling with repayments, contact your bank’s hardship team early, and free, confidential help is available from MoneyTalks on 0800 345 123 (moneytalks.co.nz).
Hatch vs Sharesies
| Feature | Hatch | Sharesies |
|---|---|---|
| Markets | US only (NYSE, NASDAQ) | NZ, Australia and US |
| Brokerage | Flat US$3 per trade (up to 300 shares) | 1.9% with per-market caps (about US$5 on US orders) |
| Currency fee | ~0.5% | ~0.5% |
| Ongoing fee | None | Optional monthly plans |
| Fractional shares | Check current — sources differ | Yes, from $0.01 |
On US trades, Hatch’s flat US$3 tends to be a little cheaper than Sharesies’ capped percentage above roughly US$160 per order; below that they’re similar. For NZ or Australian shares, or guaranteed fractional investing, Sharesies covers more ground. Many investors use both. Confirm current fees on each platform before deciding.
Frequently asked questions
What is a mortgage holiday in NZ?
It’s a temporary agreement with your bank to pause your home-loan repayments, usually for three to six months. It’s not a cancellation — interest keeps accruing during the break and is added to your loan balance, so your debt grows. It’s a hardship tool for genuine, temporary financial difficulty, not free money.
Is a mortgage holiday a good idea?
It depends. It’s useful for a short-term shock — job loss, illness, a sudden income drop — where you need immediate relief and have a clear path back to full repayments. But because it increases your long-term interest cost, it’s usually a last resort after cheaper options like interest-only payments or a term extension.
Can I just stop paying my mortgage for a few months?
No — a pause must be agreed with your bank first, through a formal hardship request. Simply stopping payments without approval counts as missed payments and a default, which seriously damages your credit record. Contact your bank’s hardship team before you miss anything.
Will a mortgage holiday affect my credit score?
Because it’s an agreed hardship arrangement (not a missed payment), it shouldn’t directly drop your credit score. However, it can be recorded and may be visible to future lenders as a period of financial difficulty, which could influence their decisions — so ask your bank how they report it.
Is interest-only better than a full holiday?
For most people, yes. With interest-only you still pay the interest, so your loan balance stays put — you avoid the compounding cost of a full pause, where unpaid interest is added to the loan and you then pay interest on that interest. It’s usually the cheaper way to lower your payments.
What happens after my mortgage holiday ends?
You resume repayments, but on a larger balance — so either your payments increase, your loan term is extended, or a mix of both. Your bank will give you the new figures beforehand. If your situation hasn’t improved, contact them before the holiday ends to discuss an extension or another option.
