Mortgage repayments

A mortgage is a type of loan to buy property e.g. a home. It is a contract between a borrower and lender where the lender provides funds, and the borrower agrees to repay the lender over time. The property is used as security for the loan, and the lender can sell the property if the borrower defaults on their repayments.

Homeowners can claim mortgage repayments for the home they occupy as an accommodation cost. This is limited to mortgage repayments towards:

• the mortgage principal (amount they borrowed) for the purchase of the home
• any mortgage principal for essential repairs and maintenance
• interest (amount the lender charges for providing the loan)

The minimum repayment is the least amount a homeowner must pay towards their mortgage principal and interest. This amount can change as interest rates change. Homeowners can only claim minimum mortgage repayments as an accommodation cost.

Note if a homeowner has a revolving credit mortgage, only repayments towards the principal and interest for the purchase of the home and any essential repairs and maintenance can be included.

Refinancing means transferring a mortgage to a new lender e.g. from one bank to another. When a homeowner refinances, they pay off their existing mortgage and take out a new one. A homeowner may borrow more than they need to pay off their mortgage to do things like consolidate debt, buy a car, or make improvements to their home.

Only repayments towards the mortgage principal for the original purchase of the home, any essential repairs and maintenance, and any related interest can be included. The homeowner must provide verification from their lender showing how much of their repayments relate to accommodation costs that can be included in Accommodation Supplement.

If a homeowner has joint ownership with one or more other people but they are the only owner living in the home, the actual costs they are paying can be included as an accommodation cost.

Note some homeowners have a mortgage through the Shared Equity Scheme administered by Kāinga Ora. Repayments on these mortgages are voluntary and cannot be included as an accommodation cost.