Mortgage rates

Check out the latest interest rates.

OPINION: I’ve just returned from a trip overseas, during which I caught up with a friend from Singapore.

A chat about mortgages revealed that interest rates in Singapore were at about the 1.5 per cent mark.

My friend was shocked when I said New Zealand’s current all-time lows are between 4 per cent and 5 per cent, with average interest rates closer to 7 per cent.

To put this difference into context, a $500,000 mortgage over a 30-year term in Singapore would have a total repayment sum (including principal and interest) of $601,469, assuming an interest rate of 1.5 per cent.

In Singapore, the benefits of paying down your mortgage are almost negligible.

Meanwhile in New Zealand, if we assumed an average interest rate of 6.5 per cent, the same debt and term would have a total repayment sum of $997,858, meaning an interest cost of about $400,000 greater.

I mentioned I would probably need a new line of work in Singapore, as the benefits of paying down your mortgage there are almost negligible.

To pay a similar amount of interest to someone on a 30-year term in Singapore would mean paying off a New Zealand mortgage in about six years. This comparison does, however, highlight that in this country a great way to get ahead financially is to attack your mortgage.

A more aggressive mortgage structure could see you pay off your loan in 20 years. This would save $157,000 in interest, and should be achievable for most people.

So while we are living in a country which typically has higher interest rates than the rest of the world, there is also an opportunity to get ahead financially with some simple tweaks to your mortgage.