Cut your mortgage by five years. This $60 weekly change will eat into what you owe

Tuesday, 11 November 2025

That weekly habit could be more expensive than we realise.

That end-of-week treat meal could be costing you far more than it says on the UberEats or DoorDash receipt.

The scene will be familiar to many families. It’s Friday afternoon (finally) and your partner flicks you a cheeky message asking whether it’s a takeaway night.

It’s been a busy week for both of you (which week isn’t), and wrangling the kids has become a nightmare with all the activities they’ve signed up for. A little treat (and a break from cooking) seems justifiable.

So you drop around $60 on some burgers and call it a night.

The next week, you find another excuse and it happens again. A weekly splurge of $60 isn’t such a big deal on a small treat, is it?

Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene, tells me most people would be surprised if they realised how quickly that small amount can add up over the course of a year or two.

“If you simply redirected the cost of a weekly $60 UberEats habit, which comes to about $260 a month over 12 months, toward your 30-year housing loan, you could cut your mortgage term to 25 years and 3 months, saving around $87,318 in interest,” Sullivan says.

As of March this year, the average New Zealand first home mortgage sat around $588,000.

Jeremy Sullivan says a small change can save you tens of thousands in mortgage interest payments.

Sullivan says a borrower will pay nearly $483,294 in interest over a 30-year period at an interest rate of 4.49%, taking the total cost to north of a million dollars.

“It’s a powerful example of how small discretionary spends can quietly delay financial freedom,” says Sullivan.

“Compounding works both ways. Every dollar spent today is a dollar that isn’t compounding for your future'.

KiwiSaver vs mortgage

This money doesn’t necessarily have to go toward your mortgage.

Forty-year-old *Veronica has a mortgage sitting in the mid-$400,000 range but has continued contributing toward her retirement fund. She already has a decent emergency fund and wonders whether she should be contributing more to KiwiSaver or paying off her mortgage faster.

This is one of the most common questions sent to our team on a weekly basis. It’s the age-old debate between paying off the mortgage or investing to ensure a healthier retirement.

Referring again to the UberEats money, if you were to put an additional $260 per month into your KiwiSaver fund every month for the next 20 years, that money would grow exponentially if left to compound.

In a conservative fund (growing at 2.5%), it would become 76,900.
In a balanced fund (growing at 3.5%), it would become 86,000.
In a growth fund (growing at 4.5%), it would become 96,300.

These estimates are all on the more conservative side to account for the impact of taxes and inflation, and do not include Government and employer contributions.

The performance of most KiwiSaver funds over the last decade exceeded the growth percentages used here, but the Financial Markets Authority recommends a more conservative approach when it comes to forecasting because past performance is not a guarantee of future returns.

Comparing the dollar figures, the interest savings made over the course of your mortgage term would be similar to putting that money into a balanced fund for 20 years (based on the first-home mortgage figure).

The difference, however, is that your mortgage investment also buys time. If the psychological burden of a mortgage causes you undue stress, then it may be worth looking to pay off your mortgage as quickly as possible.

Glenn Stevenson says it's not a question of one or the other.

‘You can’t eat your lounge’

Glenn Stevenson, the head of private banking at ANZ, tells me putting money into your mortgage is broadly akin to investing in a risk-free investment return that comes with the benefit of not having tax or fees associated with it.

Every dollar you invest over and above the minimum amount delivers a return in line with the interest rate you’re paying.

“Your KiwiSaver would need to achieve a gross return of about 7 to 8% compared with paying down debt of a home loan with an interest rate of 5% to put you at parity,” says Stevenson.

Most of us tend to look at the gross returns when making decisions on KiwiSaver, but it’s important to understand the gross figure does not factor in tax, fees or inflation. The true takeaway figure is therefore often lower than the 6.5% you might often see associated with a balanced fund.

This does not mean Stevenson is firmly in the camp of prioritising only the mortgage above all else.

“I often tell people you can’t eat your lounge,” says Stevenson, making the point that investing only in your home will give you a great asset but it will not contribute to the retirement you’d like to have.

“Your mortgage and your KiwiSaver are fundamentally doing different things for you. One is something that you can live in, while the other is a separate nest egg you will be able to rely on in the future.”

Stevenson says your retirement nest egg should also be given the opportunity to compound and grow over time, which means you should keep contributing to it while also putting money into your mortgage.

The absolute minimum, says Stevenson, is contributing enough to qualify for the 3% employer contribution as well as the government-provided contributions.

Not meeting those minimum requirements would essentially be a case of throwing that money away.

More than a takeout issue

The issue of discretionary spending versus investing (either in your mortgage or KiwiSaver) is set to become more prevalent in Kiwi households in the coming months.

Cotality chief property economist Kevin Davidson recently released data showing that around 12% of existing home loans are currently on floating rates, while a further 33% are fixed but due to reprice by March.

Many of these borrowers are likely to see a meaningful reduction in repayments as they roll onto lower rates, which will give them extra money to spend as they please.

The question now is whether Kiwi households will end up splashing out more on UberEats, DoorDash and iPhones or if they’ll put that extra money toward their mortgages and KiwiSavers to get those longer-term returns.

The small choices we make today could have a major impact in the future.

*Disclaimer: The information in this article is of a general nature and is not intended to be personalised financial advice. The name of the individual in this story has been changed to protect their privacy.