Why Do New Zealand Banks Register Such High Priority Amounts on Mortgages?
If you’ve ever reviewed your mortgage documents, you may have noticed a very high “maximum priority amount” (sometimes called an all obligations amount). Often, this figure is much higher than your actual loan.
This can look worrying — but it’s normal, and there are good legal reasons for it. Here’s why banks do it:
1. Flexibility for Future Lending
The priority amount doesn’t just cover your current loan. It also allows the bank to advance more money in the future — for example, a top-up, refinance, or revolving credit facility — without needing to register a new mortgage each time. That saves time and legal costs.
2. Protection Against Other Creditors
The priority amount sets the bank’s maximum ranking claim over your property.
If another lender or creditor later registers a mortgage or caveat, your bank’s mortgage will still rank first up to that high priority amount. Without this, another lender could compete for priority if you borrowed more later.
3. Covering More Than Just the Loan
A mortgage usually secures:
The loan principal
Interest (including penalty interest)
Fees and charges
Legal costs of enforcement
Other obligations under the loan documents
The high-priority amount acts as a buffer to make sure all these obligations are covered.
4. Banking Industry Standard Practice
New Zealand banks typically set the priority amount at around 120%–150% of the initial lending. This avoids the hassle of re-registering mortgages every time you restructure, borrow more, or change facilities.
5. What It Means for Borrowers
Importantly, the priority amount does not mean you owe that much. You only owe the actual amounts advanced (plus agreed costs).
But it can affect your ability to borrow from other lenders, because the high-priority amount may leave little or no equity available for another creditor to secure against.
✅ In short: High-priority amounts are there to protect the bank and give flexibility for future lending. They’re industry standard, not a trick — but they can impact your future borrowing options.
How We Can Help
At Ross Holmes Virtual Lawyers, we regularly advise clients on property purchases, sales, and refinancing. We can explain what your mortgage documents really mean, protect your interests, and help negotiate with lenders where needed.
If you’re buying, selling, or refinancing a property, get in touch with us today — don’t wait until you’re under pressure with bank deadlines.
👉 Contact us here or at +64 9 4150099 ext 0 to make sure your property interests are protected.
