What Is a Priority Amount in a Mortgage?
If you’ve reviewed your property’s title after securing a home loan, you may have spotted something unexpected. Your mortgage might be listed on the title with a much higher figure than the amount you actually borrowed. This number is called the priority amount, and while it might look alarming, it’s not as dangerous as it seems—provided you understand how it works.
Let’s unpack what the priority amount means, how it relates to your loan, and why it matters for homeowners in New Zealand.
Priority Amount vs Loan Amount: What’s the Difference?
The loan amount is what you actually borrow from the bank. For example, if you're borrowing $700,000 to buy your home, that's your loan amount.
The priority amount, on the other hand, is the figure registered on your certificate of title—usually much higher than your loan. It’s not what you owe. Instead, it sets the maximum amount the lender has legal priority over if they ever need to recover their money by selling the property.
It’s essentially a legal buffer. It covers not only your initial loan, but also:
Future top-ups or increases to your mortgage
Unpaid interest
Enforcement costs (e.g., legal fees or recovery costs if you default)
Penalty interest if applicable
So while you may only owe $700,000, the priority amount listed might be $850,000 or more.
Why Is There a Priority Amount?
Banks include a priority amount to protect their legal interest in your home. In the unlikely event you default and your property is sold, the bank wants to ensure it can recover:
The balance of your loan
Any accrued but unpaid interest
The cost of selling the property
Legal or enforcement fees
By registering a higher priority amount on the title, the lender secures a wider financial safety net.
Does It Mean You Owe More Money?
No. The priority amount does not mean the bank can demand the full figure listed on the title unless you’ve actually borrowed that much. You’re only ever liable for what you agreed to in your loan contract—including any interest or fees as outlined.
In other words:
Priority amount ≠ loan balance.
But it does mean the bank can legally be repaid up to that amount before any other creditors (like a second mortgage lender) can claim a share of the sale proceeds.
Will This Affect You When Selling or Refinancing?
For most borrowers, the priority amount is simply a legal formality that has no impact unless you:
Apply for a second mortgage or caveat: A second lender may want to know how much “space” is left beneath the priority amount, since the first lender gets paid first.
Top up your loan: If your loan increases, the priority amount may already cover the new balance—saving time and legal fees when amending the mortgage.
Sell your home: When your lawyer arranges to repay your mortgage from the sale proceeds, they’ll ensure only the actual loan balance and accrued interest is paid—not the full priority amount.
Can You Change the Priority Amount?
In most cases, the lender will set the priority amount and include it in the mortgage documents you sign. However, if you're working with a second lender or want more flexibility, your lawyer can request a variation—although banks don’t always agree.
Be aware that a low priority amount can restrict your ability to top up your loan in future. If your mortgage is registered with a priority amount of $700,000 and you’ve already borrowed $690,000, you might have trouble accessing further funds without refinancing or re-documenting the mortgage.
Final Word: Understand It, But Don’t Stress
The priority amount exists to protect lenders and give them flexibility when securing their loans—but it doesn’t mean you owe more than what’s in your loan agreement.
When buying a property, your lawyer will typically explain the priority amount listed in your mortgage documents. If you're unsure, don’t hesitate to ask them to clarify how it might affect your situation.
In most cases, it’s a line on a title that you’ll never have to think about again.
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