The vast majority of NZ mortgages are table loans — also called principal and interest loans or amortising loans. Understanding how a table mortgage works helps you see why extra repayments early in your loan are so powerful, and why you’re still paying mostly interest a decade in.
A table mortgage has equal repayments for the life of the loan. Early repayments are mostly interest; later repayments are mostly principal. On a $600,000 mortgage at 5.89% over 30 years, your first monthly repayment of ~$3,547 is ~$2,945 interest and only ~$602 principal. By year 20, the same repayment is ~$1,900 interest and ~$1,647 principal. The "table" refers to the schedule of repayments that stays constant throughout.
How a Table Mortgage Works
In a table loan, the bank calculates a fixed repayment amount that will fully repay your loan by the end of the term — assuming the interest rate stays constant. Each repayment covers:
- Interest charged for that period (calculated on the outstanding balance)
- Principal repayment (the remainder after interest)
As your balance falls, less interest accrues each period, so more of each repayment goes to principal. This creates the characteristic amortisation curve.
The Amortisation Schedule
For a $600,000 mortgage at 5.89%, 30-year term, monthly repayments of ~$3,547:
| Year | Opening balance | Annual interest paid | Annual principal paid | Closing balance |
|---|---|---|---|---|
| 1 | $600,000 | $34,986 | $7,578 | $592,422 |
| 5 | $567,000 | $32,905 | $9,659 | $557,341 |
| 10 | $519,000 | $29,750 | $12,814 | $506,186 |
| 15 | $452,000 | $25,620 | $16,944 | $435,056 |
| 20 | $359,000 | $19,980 | $22,584 | $336,416 |
| 25 | $229,000 | $12,200 | $30,364 | $198,636 |
| 30 | $47,000 | $2,190 | $40,374 | ~$0 |
Figures are approximate and assume a constant rate of 5.89%.
Key insight: In the first 5 years, you pay approximately $165,000 in total repayments — but only reduce your balance by ~$43,000. The other ~$122,000 is interest.
Total Interest Over 30 Years
On a $600,000 mortgage at 5.89% over 30 years:
- Total repayments: ~$1,277,000
- Principal repaid: $600,000
- Total interest paid: ~$677,000
You pay more than the loan twice over — $677,000 in interest on top of the $600,000 borrowed. This is why paying extra, refinancing to a better rate, or shortening the loan term is so financially powerful.
25-Year vs 30-Year Term
Most NZ banks offer terms of 25 or 30 years. The difference on the same $600,000 loan at 5.89%:
| Term | Monthly repayment | Total interest paid | Difference |
|---|---|---|---|
| 30 years | ~$3,547 | ~$677,000 | — |
| 25 years | ~$3,938 | ~$581,000 | Save ~$96,000 |
Shortening the term by 5 years costs ~$391/month more but saves ~$96,000 in interest. If you can afford it, a 25-year term (or making overpayments equivalent to a shorter term) is one of the highest-return financial decisions you can make.
Why Early Extra Repayments Matter So Much
Because almost all of each early repayment is interest, any extra you pay goes almost entirely to reducing the principal balance — which reduces the interest that accrues in every subsequent period.
Example: A single $10,000 lump sum paid at the start of a 30-year $600,000 mortgage at 5.89%:
- Immediately reduces balance to $590,000
- Interest for the next period is calculated on $590,000, not $600,000
- This compounds over 30 years — a $10,000 early payment saves approximately $19,000–$23,000 in total interest and cuts about 14–16 months off the term
The same $10,000 paid in year 25 saves much less — the balance is small and there’s little time for the compound effect to operate.
Table Mortgage vs Other Structures
| Structure | Repayment amount | Balance change | Best for |
|---|---|---|---|
| Table loan (principal + interest) | Fixed | Reduces each period | Most borrowers; certainty of repayment |
| Interest-only | Lower (interest only) | Unchanged | Investors managing cashflow; bridging |
| Revolving credit | Flexible | Can go up or down | Disciplined borrowers with irregular income |
| Reducing (straight-line) | Reduces over time | Fixed principal reduction per period | Uncommon in NZ; higher early repayments |
Frequently Asked Questions
Why does the bank call it a “table” mortgage?
The name comes from the repayment schedule — the table of periodic payments that stay constant throughout the loan. Each row in the table shows how the split between interest and principal changes, but the total repayment stays the same.
Can I change my repayment amount on a table mortgage?
Yes — you can usually make additional repayments at any time (subject to break fee rules if you’re on a fixed rate). Increasing your regular repayment above the minimum reduces your balance faster and shortens the loan term.
Does switching from monthly to fortnightly payments save money?
Yes — fortnightly payments result in 26 half-payments per year (equivalent to 13 monthly payments rather than 12). This effectively makes one extra monthly repayment per year, which reduces the principal faster. See Payment Frequency NZ for the detail.
What happens if I’m on a fixed rate and want to make extra repayments?
Most NZ banks allow extra repayments on fixed-rate mortgages up to a limit (typically $500–$5,000 above the scheduled repayment per month, or 5–10% of the original loan per year). Amounts above this limit may trigger a break fee. Check your specific loan terms.
Is a table mortgage the same as a principal and interest loan?
Yes — these terms are interchangeable in NZ. “Table loan”, “principal and interest loan”, “P&I loan”, and “amortising loan” all refer to the same structure.