Major Lending Shift: 10-Year Interest Only Period Now Available to Property Investors

ANZ has shaken up the market by offering up to 10 years of interest-only repayments for residential investment loans.

Until now, most interest-only terms in New Zealand topped out at three years, with five years considered generous. Doubling that time frame is a game-changer for Hamilton landlords and anyone working with a Hamilton property manager to grow or manage their portfolio.

Here’s how it works - and why it matters for the Hamilton property investment market.

What Does Interest-Only Actually Mean?

With interest-only repayments, you pay just the interest on your loan for an agreed period - the principal (the original amount borrowed) stays the same.

For example, on a $500,000 loan at 4.99% p.a., principal and interest repayments would be about $2,682/month.

On interest-only, that drops to around $2,080 - a saving of more than $600 per month during the interest-only term.

Why 10-Year Interest-Only is a Big Deal for Hamilton Landlords

1. Better Cash Flow, Less Stress

Lower repayments mean more money left in your pocket each month. This could go towards:

• Renovations to keep your property competitive in Hamilton’s rental market.

• Paying down your own home loan faster (where interest isn’t tax-deductible).

• Covering unexpected expenses without dipping into personal savings.

• Saving towards the deposit for your next investment property.

A Hamilton property manager will tell you — cash flow is king, and this structure gives landlords more flexibility to handle the ups and downs of property ownership.

2. Capital Growth First, Income Later

Many Hamilton landlords buy with a focus on long-term capital gains rather than immediate rental profit. If your strategy is to hold for growth, making lower payments and freeing up capital for improvements can be more beneficial than aggressively reducing the mortgage principal.

That could mean adding a bedroom, upgrading kitchens and bathrooms, or enhancing outdoor spaces — all of which can lift rental appeal and property value.

3. Potential Tax Benefits

Under current rules, Hamilton property investors can deduct 100% of interest costs on investment lending from rental income, reducing taxable profit. With an interest-only structure, you’re maximising the amount of interest (and therefore deductions) paid.

Of course, tax laws can change, so it’s wise to speak to an accountant before banking on this benefit long-term.

4. Focusing on Your Own Home Loan

Because investment property deposits are higher, many landlords end up with a larger mortgage on their own home than on their rental.

The savings from a 10-year interest-only term could be redirected to pay off that personal debt faster — reducing interest on a loan where there’s no tax deduction.

Things Hamilton Property Investors Should Keep in Mind

A longer interest-only term doesn’t mean avoiding principal forever. Once the 10 years is up, the loan reverts to principal and interest repayments — and because the principal hasn’t reduced, those repayments will be higher than if you’d been paying it down from day one.

Also consider:

• You’ll pay more interest over the life of the loan compared to starting with principal and interest.

• Equity growth during the interest-only period relies entirely on property values increasing.

• You’ll need a clear exit or refinance plan well before the term ends.

The Bottom Line for Hamilton Property Management

ANZ’s move to offer 10-year interest-only loans gives Hamilton landlords and property managers a powerful new tool for managing cash flow and planning for long-term growth. It won’t be the right fit for every investor, but for those focused on capital gains, portfolio expansion, or freeing up funds for other goals, it could be a game-changer.

As with any loan structure, the key is aligning it with your investment strategy — and making sure you’re ready for what happens when the interest-only period ends.

Oliver Pearson

Manager and Property Investor for 20+ years

Oliver Pearson

Manager and Property Investor for 20+ years

Oliver Pearson began investing in property aged 21 and has since bought, developed and sold real estate in the UK, USA, South East Asia and New Zealand. After a career in banking he is now on the management team at Waikato Real Estate and has contributed to property articles for NZ Herald, Stuff and Property Investor Magazine.

Based in Raglan, Oliver's passions extend beyond property to surfing, hydrofoiling, and providing a taxi service for his children.