The questions and original answers

Which New Zealand bank is best if your income has dropped and your mortgage repayments are becoming difficult?

My advice is to speak to your current bank first, then compare hardship options with other lenders before deciding whether to switch. If your income has dropped, moving your mortgage to another bank isn't necessarily the best solution, because a new bank will generally reassess your income, expenses, debts and ability to afford the repayments.

The good news is that you may have options even if your current repayments are becoming unaffordable.

The best bank for you will depend on whether you need:

• Lower repayments immediately to free up money each fortnight or month.
• A lower interest rate to reduce your ongoing costs.
• Temporary relief while your income recovers.
• A longer mortgage term to spread repayments over more years.
• To refinance to another bank because your current lender won't offer a suitable solution.

My shortlist of banks to approach in New Zealand

I wouldn't automatically recommend switching to one particular bank without knowing your circumstances. However, these are reasonable places to start.

Bank	Why consider it?	Best next step
BNZ	Publishes clear options for customers experiencing financial difficulty, including reducing repayments and applying for hardship assistance.	BNZ financial hardship support
ANZ	Worth approaching to discuss whether your existing loan can be restructured or whether refinancing might be appropriate.	ANZ New Zealand
ASB	Another major lender to approach about your repayment difficulties and possible loan changes.	ASB New Zealand
Westpac	Worth comparing if you're looking at restructuring your mortgage or refinancing.	Westpac New Zealand
Kiwibank	Another option to investigate, particularly if you want to compare home-loan structures and repayment options.	Kiwibank

BNZ explicitly offers hardship variations that may extend the loan term, postpone repayments, or combine both approaches. That makes it a useful starting point for understanding what assistance might be available, although it doesn't mean BNZ will necessarily be the best lender for you. Source: BNZ hardship application.

What I would do before switching banks

1. Ask your current bank to reduce your repayments

Explain that your income has dropped and your current mortgage repayments are becoming difficult to manage.

Ask whether it can:

• Extend the mortgage term to reduce your regular repayments.
• Temporarily reduce or defer repayments.
• Restructure the mortgage to make payments more affordable.
• Offer a different interest rate or loan structure.

You don't necessarily need to change banks to get help.

New Zealand's Consumer Protection guidance recommends contacting your lender as soon as you realise you may have trouble paying. You can find more information in its mortgage repayment difficulties guide.

2. Be careful about refinancing to another bank

A different bank might offer a lower interest rate, but there is an important complication: if your income has fallen significantly, the new bank may decide you can no longer afford the mortgage.

Lenders must make reasonable inquiries to assess whether a loan is affordable before entering into a new lending agreement or making a material change. This can make refinancing harder when your income has dropped. Source: Financial Markets Authority.

Also, check whether you would have to repay any cashback received from your current bank, pay a fixed-rate break fee, or incur legal and other switching costs.

3. Know your hardship options

If an unexpected event, such as losing your job or experiencing a significant income reduction, means you cannot reasonably meet your repayments, you may be eligible to apply for a formal hardship variation.

Depending on your circumstances, this could involve:

• Extending the mortgage term and reducing each payment.
• Postponing repayments for a specified period.
• Combining a longer term with a temporary repayment deferral.

Eligibility requirements apply, and your lender must assess your situation. These options can also increase the total interest you pay. Source: Financial Markets Authority hardship guidance.

If you're struggling to cover essential living costs as well as your mortgage, you can also contact MoneyTalks for free, confidential financial mentoring.

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Let me help you work out which bank is best for your situation

I can give you a more useful recommendation if you tell me a little about your mortgage. You don't need to share any identifying or account information.

First, which of these best describes your situation?

A. I've lost my job or my income has dropped substantially.

B. I'm still working, but my income has reduced and my mortgage is becoming unaffordable.

C. My mortgage has become difficult to manage mainly because of high interest rates and living costs.

D. I've already missed repayments, or I'm worried I might miss one soon.

And, if you know them, please tell me:

• Current bank: ANZ, ASB, BNZ, Westpac, Kiwibank or another lender?
• Mortgage remaining: Approximately how much do you still owe?
• Household income: Roughly how much do you now receive per month, after tax?

With those details, I can help you narrow down whether it makes more sense to negotiate with your existing bank, explore refinancing with another lender, or seek immediate hardship assistance.