A mortgage holiday in New Zealand: how it works, what it costs and who offers one
Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). QuoteHub is a trading name.
A "mortgage holiday" is not a free pause: it is a temporary repayment deferral that New Zealand banks call financial hardship assistance, and while you stop paying, interest keeps accruing on what you owe, so the loan balance grows (Banking Ombudsman Scheme, retrieved 9 September 2026). All five main banks list job loss as a qualifying reason to apply.
Is a mortgage holiday a good idea?
It depends on whether your finances are likely to recover within a few months. The Banking Ombudsman Scheme's own guidance is blunt about this: a repayment deferral "may not be in your best interests if your finances are unlikely to improve in the short term (three to six months)", since it can simply delay an unavoidable default while you owe even more by the time it happens (Banking Ombudsman Scheme, Hardship and financial difficulty, retrieved 9 September 2026). If your situation is genuinely short-term, such as a redundancy where you expect to find work again soon, a deferral or reduced repayment can be exactly the right tool.
Is a mortgage holiday a good idea?
It can be, but only as a genuinely short-term bridge, since interest continues to accrue on the unpaid balance during a deferral and your repayments or loan term increase afterwards to make up the gap (Banking Ombudsman Scheme, Hardship and financial difficulty, retrieved 9 September 2026). If your income is unlikely to recover within three to six months, the Banking Ombudsman Scheme suggests other options, such as selling an asset, may serve you better than deferring and owing more.
Is it possible to get a mortgage holiday?
Yes. All five of New Zealand's main banks, ANZ, ASB, BNZ, Westpac and Kiwibank, publish financial hardship assistance for home loan customers, and job loss or reduced income is explicitly listed as a qualifying reason by each of them (see the table below for each bank's own page). None of them is obliged to agree, but the Credit Contracts and Consumer Finance Act 2003 gives you a right to ask and requires your bank to properly consider the application.
How to qualify for a mortgage holiday?
You generally need to show your bank that your circumstances have genuinely changed, for example through job loss, illness, injury, a relationship breakdown or a natural disaster, and explain in writing why you cannot currently meet your repayments (Banking Ombudsman Scheme, Hardship and financial difficulty, retrieved 9 September 2026). Under the Credit Contracts and Consumer Finance Act 2003, you must also have been in default for less than two months and have missed no more than four consecutive payments if you are already behind; each bank then asks for supporting documents such as a statement of financial position or proof of income.
What each bank offers, and what it does not
None of the five major banks publishes a fixed length for a repayment deferral: every application is assessed case by case, and the specific relief offered (a full pause, reduced repayments, interest-only, or a longer loan term) depends on your circumstances.
| Bank | Job loss listed as a qualifying reason | What they may offer | Source |
|---|---|---|---|
| ANZ | Yes ("job loss, serious illness or a relationship breakdown") | Loan restructure: extend the term, or interest-only for a short period; may incur a fee | ANZ, Financial hardship |
| ASB | Yes ("Unemployment - Redundancy, loss of job or reduced income") | Case-by-case support from the Financial Assistance team, based on a statement of financial position | ASB, Financial hardship assistance |
| BNZ | Yes (financial hardship, general) | Reduce repayments to the minimum required level, or a hardship variation (extend the loan term and/or a payment deferral, with interest still accruing) | BNZ, Trouble with home loan repayments |
| Westpac | Yes ("losing your job, reduced income, illness or injury, a relationship ending, or the death of a spouse or partner") | Reduce repayments, extend the loan term, pause or defer repayments, or reduce the interest rate on some lending | Westpac, Financial hardship support |
| Kiwibank | Yes ("A recent job loss or you're working less hours") | Affordable repayment plan, interest-only repayments, a repayment deferral, or restructuring the loan | Kiwibank, Financial hardship & assistance |
Source: each bank's own page as listed, retrieved 9 September 2026. No charge or fee applies to apply for hardship assistance itself at any of the five banks, though a loan restructure at ANZ may carry a separate fee.
Can I take a mortgage holiday with Westpac in New Zealand?
Yes. Westpac's own financial hardship page lists losing your job among the qualifying changes in circumstance, and support may include reducing repayments, extending the loan term, pausing repayments for a period, deferring repayments for an agreed period, or reducing the interest rate on some lending products (Westpac, Financial hardship support, retrieved 9 September 2026). Westpac suggests checking any redundancy or trauma insurance you hold, and KiwiSaver hardship withdrawal, before applying.
The legal right behind "hardship", and its limits
Banks are not obliged to agree to a repayment deferral, but under the Credit Contracts and Consumer Finance Act 2003 they are obliged to properly consider an application from a borrower in genuine hardship, and to follow a defined process (Banking Ombudsman Scheme, Hardship and financial difficulty, retrieved 9 September 2026).
| Step | What the law requires |
|---|---|
| Who can apply | A borrower who is in default for less than two months and has missed no more than four consecutive payments, or who is not yet in default at all |
| What you must provide | A written explanation of why you cannot meet repayments (for example illness, injury, loss of employment, or a relationship breakdown) |
| Bank's acknowledgement | Must acknowledge the application within 5 working days |
| Bank's decision | Must give its decision within 20 working days, with written reasons if declined |
| If declined | You can ask the Disputes Tribunal or the courts to change the contract terms, or complain to your bank's dispute resolution scheme |
Source: Banking Ombudsman Scheme, Hardship and financial difficulty (updated December 2024), retrieved 9 September 2026.
Does ANZ offer a mortgage holiday?
ANZ lists job loss, serious illness or a relationship breakdown as qualifying circumstances for its financial hardship assistance, and can offer a loan restructure such as extending the term or moving to interest-only repayments for a short period, though this may carry a fee (ANZ, Help with financial difficulty, retrieved 9 September 2026). ANZ also suggests checking any insurance held through its partner Chubb Life first.
Does ASB offer a mortgage holiday?
Yes, through ASB's Financial Assistance team, which can help after "a recent, unexpected and/or life changing event", explicitly including unemployment, redundancy, loss of job or reduced income (ASB, Financial hardship assistance, retrieved 9 September 2026). ASB asks for a statement of financial position setting out your current income and outgoings before assessing what it can offer.
Does Kiwibank offer a mortgage holiday?
Yes. Kiwibank explicitly lists "a recent job loss or you're working less hours" as a qualifying circumstance, and there is no charge or fee to apply; Kiwibank acknowledges applications within 5 business days and confirms if more information is needed within 10 (Kiwibank, Financial hardship & assistance, retrieved 9 September 2026).
Does a mortgage holiday affect my credit score?
It can. Kiwibank's own guidance states plainly that "hardship assistance may appear on your credit reporting history" (Kiwibank, Financial hardship & assistance, retrieved 9 September 2026). None of the other four banks' pages fetched for this guide state their position on credit reporting explicitly, so ask your own bank directly before applying if this matters to you.
What documents do banks usually ask for?
Typically a statement of financial position covering your current income and outgoings, and some banks may request payslips, proof of income, bank statements, or details of other loans, and may also run a credit check as part of assessing your application (ASB and Kiwibank hardship pages, retrieved 9 September 2026). Contact your specific bank for its exact requirements, since these are not standardised across all five.
What happens to the interest during a mortgage holiday?
It keeps accruing. A repayment deferral means you make no payments during the agreed period, but interest continues to be added to what you owe, so by the end of the deferral you owe more than when you started, and either your repayments rise or your loan term is extended to cover the difference (Banking Ombudsman Scheme, Hardship and financial difficulty, retrieved 9 September 2026). Before agreeing, ask your bank for the total amount you will owe at the end of the deferral, your new repayment amount, and whether the loan's term is changing.
How long does a mortgage holiday last?
None of the five banks publishes a fixed length; the period is agreed case by case based on your situation, and the Banking Ombudsman Scheme's own guidance frames a deferral as suited to a short-term problem, in the order of three to six months, rather than an open-ended pause (Banking Ombudsman Scheme, Hardship and financial difficulty, retrieved 9 September 2026). Ask your bank to confirm the specific end date and what happens automatically once it is reached.
What else can help before or alongside a mortgage holiday?
Several banks explicitly suggest checking any insurance you already hold, since making a claim on redundancy cover, mortgage repayment insurance, or income protection can sometimes cover repayments without needing to defer anything (ANZ, Westpac and Kiwibank hardship pages, retrieved 9 September 2026). A KiwiSaver hardship withdrawal is a further, separate option that several banks mention, though it is a last resort given KiwiSaver's purpose is retirement savings.
Before applying for a deferral, the options several banks explicitly point you towards first are:
| Option to check first | Why it may help before you defer |
|---|---|
| Existing redundancy, trauma or life and living cover | May pay out directly and cover repayments without increasing what you owe |
| Existing income protection or mortgage repayment insurance | Designed specifically to replace lost income or cover a mortgage |
| KiwiSaver hardship withdrawal | A last-resort option several banks list, separate from your mortgage itself |
| Reducing to minimum repayments (if paying above the minimum) | May free up cash without needing a formal hardship application at all |
Source: ANZ, Westpac and Kiwibank hardship pages, retrieved 9 September 2026.
Where a mortgage holiday fits after a job loss
A mortgage holiday buys time; it does not replace income, and the interest that keeps building during a deferral is the real cost of that time. QuoteHub's read is that a repayment deferral works best as a short bridge used alongside Jobseeker Support, any redundancy payment, and any income protection or mortgage repayment cover already in place, rather than as the only plan, precisely because the Banking Ombudsman Scheme itself warns that a deferral can simply delay, not solve, a problem that will not resolve within a few months.
This page is part of our losing your job in NZ cluster, alongside our separate estate planning cluster if a mortgage forms part of wider financial planning. See Jobseeker Support for the benefit that can help cover repayments, redundancy pay in NZ for what you may be owed, notice periods in NZ for your final pay timing, and our step-by-step first 30 days after redundancy for the order to work through all of this in. For the insurance side of a mortgage, see mortgage repayment insurance, our mortgage protection guide, our mortgage protection calculator, our life insurance for mortgage holders guide, our life insurance with a home loan guide, and our mortgage protection insurance calculator explainer. If you had redundancy cover attached to another policy, our guide to redundancy insurance in NZ explains which insurers still sell it, and our income protection insurance guide, income protection calculator, income protection cost guide and comparison of income protection insurance cover the broader alternative. Our how to compare insurance quotes in NZ page, methodology and how it works explain how we build the comparisons this cluster links to.
Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). QuoteHub is a trading name.
Adviser's view
QuoteHub's view is that the word holiday is the problem: it suggests a pause with no cost, when every one of the five main banks keeps charging interest on the unpaid balance throughout a deferral, so the loan grows even as the repayments stop, and the Banking Ombudsman Scheme itself warns the tool suits a short recovery, not a long one.
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Cite this page QuoteHub NZ (2026). Mortgage Holiday NZ: How It Works and What It Costs. www.quotehub.co.nz/guides/losing-your-job/mortgage-holiday-nz. Updated 2026-09-09.
References
- Banking Ombudsman Scheme: Hardship and financial difficulty
- ANZ: Help with financial difficulty
- ANZ: Apply for financial hardship assistance
- ASB: Financial hardship assistance
- BNZ: What you can do if you're having trouble with home loan repayments
- Westpac: Financial hardship support
- Kiwibank: Financial hardship & assistance
Explore related pages: Life Insurance, Income Protection, Health Insurance, Trauma Insurance, Compare Insurance NZ.