PropertyTab Documentation
The PropertyTab is the most comprehensive section of the financial planning model, managing all aspects of property ownership from purchase through to sale. It handles multiple properties (up to 5), complex debt structures with multiple loans per property, repayment strategies, income generation, and strategic property transitions (sales, downsizing, and upsizing).
This tab controls:
- Property Values: Current values, growth rates, and future projections.
- Multiple Loans: Up to multiple loans per property with individual terms, rates, and types (fixed vs floating).
- Interest Rate Structures: Single rate, multiple rate periods (short/mid/long-term), or floating rate ranges.
- Purchase Details: Funding sources including savings, KiwiSaver, investment funds, property equity, gifting, debt, and other sources.
- Sales, Downsizing, and Upsizing: Strategic property transitions with proceeds allocation to debt repayment and investments.
- Repayments: Interest-only periods, lump sum payments, and additional repayments.
- Income: Rental income (taxable) and board income (non-taxable).
- Expenses: Detailed property expense tracking with inflation.
- Offset Accounts: Balance reduction for interest calculation.
- Interest Tax Deductibility: Partial or full deductibility of mortgage interest.
- Transaction Costs: Costs associated with property sales.
- Brightline Tax: Capital gains tax implications for investment properties.
Inputs
Property Details
Basic Property Information
- Property Title: Custom name for the property (e.g., "Main Family Home", "Auckland Rental", "Beach House").
- Property Value (today's dollars): Current market value of the property at the start of the financial plan.
- Property Growth (%): Expected annual growth rate of the property value. Typical NZ residential properties range from 3-7% depending on location and market conditions.
Property Growth Calculation: The property value increases each year based on the growth rate:
Property Value (Year N) = Property Value (Year N-1) × (1 + Property Growth % / 100)
Example:
Current Property Value: $800,000
Property Growth: 5% per year
After 10 years: $800,000 × (1.05)^10 = $1,302,282
Purchase Details
Properties can be modeled as already owned or as future purchases. When purchase details are enabled, you specify when and how the property will be acquired.
Purchase Configuration
- Purchase Age: The age at which the property is or will be purchased.
- Future Property Value: If purchasing in the future, the system calculates the expected property value at purchase age based on the property growth rate.
Future Value Calculation:
Years to Purchase = Purchase Age - Starting Age
Property Growth Factor = (1 + Property Growth % / 100) ^ Years to Purchase
Future Property Value = Current Property Value × Property Growth Factor
Example:
Current Property Value: $600,000 (in today's dollars)
Property Growth: 4% per year
Starting Age: 35
Purchase Age: 40
Years to Purchase: 5 years
Property Growth Factor = (1.04) ^ 5 = 1.2167
Future Property Value = $600,000 × 1.2167 = $730,000 (at age 40)
Deposit Sources
The deposit required for purchase can come from multiple sources. The system tracks exactly where funding comes from and withdraws from these accounts accordingly.
Available Sources:
- Savings Fund: Cash from the savings account
- Main KiwiSaver: Withdrawal from the main member's KiwiSaver (first home withdrawal)
- Partner KiwiSaver: Withdrawal from the partner's KiwiSaver
- Investment Funds (Fund 1-5): Liquidation from specific investment funds
- Property Equity: Leveraging equity from existing properties (maintains 20% minimum equity rule)
- Debt: Additional mortgage beyond the calculated requirement (creates a new loan)
- Gifting: Gifts from family or other parties - (External funds, not drawn from scenrio amounts)
- Other: Any other funding sources - (External funds, not drawn from scenrio amounts)
Required Deposit Calculation:
Future Property Value = Current Property Value × Growth Factor
Future Debt = Total Loan Amount × Growth Factor
Required Deposit = Future Property Value - Future Debt
The total of all deposit sources should equal the required deposit. The system validates that sources are available and tracks the impact on each fund.
Property Equity Example:
Existing Property 1:
- Current Value: $1,000,000
- Current Debt: $400,000
- Equity: $600,000
- Minimum 20% Equity Required: $200,000
- Available Equity: $600,000 - $200,000 = $400,000
New Property Purchase:
- Required Deposit: $150,000
- Use $150,000 from Property 1 equity
- Property 1 equity after: $450,000 (still above minimum)
Complete Purchase Example:
Property Purchase at Age 40:
- Future Property Value: $730,000
- Future Total Debt: $530,000
- Required Deposit: $200,000
Deposit Sources:
- Savings: $50,000
- Main KiwiSaver: $30,000
- Investment Fund 1: $70,000
- Gifting: $50,000
Total Sources: $200,000 ✓
Account Impacts at Age 40:
- Savings Fund: Reduced by $50,000
- Main KiwiSaver: Reduced by $30,000
- Investment Fund 1: Reduced by $70,000
- Property acquired with $530,000 debt
Debt Structure (Multiple Loans)
Each property can have multiple individual loans, each with its own terms, rates, and characteristics. This allows accurate modeling of split loan structures common in NZ mortgages.
Loan Configuration
- Loan Name: Custom identifier (e.g., "Fixed 2-Year", "Floating Portion", "Construction Loan")
- Debt Amount ($): The loan principal in today's dollars
- Loan Term (years): Total duration of the loan
- Loan Type: Fixed or Floating
Fixed Rate Loans
Fixed rate loans offer two interest rate configurations:
1. Single Interest Rate:
- One fixed rate applies for the entire loan term
- Simple and straightforward
2. Multiple Rate Periods: Three sequential rate periods with different rates and durations:
- Short Term Rate (%): Rate for the initial period (typically 1-2 years)
- Short Term Years: Duration of the short-term rate
- Mid Term Rate (%): Rate for the middle period (typically 2-5 years)
- Mid Term Years: Duration of the mid-term rate
- Long Term Rate (%): Rate for the remaining loan term
Multiple Rate Period Example:
Loan Amount: $500,000
Loan Term: 25 years
Rate Structure:
- Years 1-2: 5.5% (Short Term)
- Years 3-7: 6.0% (Mid Term)
- Years 8-25: 6.5% (Long Term)
This models refixing the mortgage at different rates over time.
Floating Rate Loans
Floating rate loans use variable rate simulation with a defined range:
- Minimum Rate (%): Lower bound for rate variation
- Maximum Rate (%): Upper bound for rate variation
- Standard Deviation (%): Volatility of rate changes
- Starting Rate (%): Starting Interest Rate of the loan
- Percentage Change (%): Amount at which the rate changes
- Change Frequency: Annual frequency of rate changes
The Loan will begin at the starting rate and then ether increase or decrease (dependant on the selected toggle) by the percentage change based on the change frequency. This will occur until one of the upper or lower bounds is reached, upon which it will reverse and continue its annual change until it hits the oppsite bound - This will continue indefinitely until the loan has been fully repaid.
Mortgage Payment Calculation
Standard Principal + Interest Payment:
Monthly Interest Rate = Annual Rate / 12 / 100
Number of Payments = Loan Term × 12
Monthly Payment = Principal × [r(1+r)^n] / [(1+r)^n - 1]
Where:
r = Monthly Interest Rate
n = Number of Payments
Annual Payment = Monthly Payment × 12
Complete Mortgage Example:
Loan Amount: $500,000
Annual Interest Rate: 6.0%
Loan Term: 25 years
Monthly Interest Rate = 6.0 / 12 / 100 = 0.005
Number of Payments = 25 × 12 = 300
Monthly Payment = $500,000 × [0.005(1.005)^300] / [(1.005)^300 - 1]
Monthly Payment = $500,000 × 0.006443 = $3,221.50
Annual Payment = $3,221.50 × 12 = $38,658
Interest-Only Payment: During interest-only periods, only interest is paid:
Annual Interest Payment = Loan Balance × (Interest Rate / 100)
Repayments
Interest-Only Period
Loans can have a period where only interest is paid, with no principal reduction.
- Interest Only Period: Toggle to enable
- Start Age: When interest-only payments begin
- End Age: When interest-only payments end and principal payments resume
Interest-Only Example:
Loan: $500,000 at 6.0%
Interest-Only Period: Ages 35-40
Ages 35-40 (Interest-Only):
Annual Payment = $500,000 × 6.0% = $30,000
Principal Balance: Remains $500,000
Age 41+ (Principal + Interest):
Remaining Term: 20 years
Recalculated Monthly Payment based on $500,000 over 20 years
Why Use Interest-Only:
- Lower payments during high-expense periods (e.g., young children, property renovation)
- Frees up cashflow for other investments
- Useful for investment properties where rental income covers interest
Lump Sum Payments
One-off payments that reduce the principal balance of a specific loan at a specific age. Multiple lump sum payments can be configured per property.
- Age: When the lump sum payment is made
- Loan: Which loan the payment applies to
- Amount: Total amount of the payment
- Sources: Where the payment comes from (savings, investment funds)
Lump Sum Payment Sources:
- Savings Fund
- Investment Fund 1-5
Lump Sum Example:
Loan Balance at Age 50: $350,000
Lump Sum Payment:
- Age: 50
- Amount: $50,000
- Sources:
- Investment Fund 1: $30,000
- Savings: $20,000
Result:
- New Loan Balance: $300,000
- Investment Fund 1 reduced by $30,000
- Savings reduced by $20,000
- Future mortgage payments recalculated based on $300,000 balance
- Interest savings over remaining loan term
Multiple Lump Sum Example:
Loan: $500,000 at 6.0%, 25-year term, starting at age 35
Lump Sum 1 at Age 40:
- Amount: $30,000 from Savings
- New Balance: $470,000
Lump Sum 2 at Age 50:
- Amount: $50,000 from Investment Fund 1
- New Balance: $380,000 (after 10 years of payments on $470,000)
Each payment reduces principal and recalculates remaining payments.
Property Sale
For Property 1 only, you can model selling the property without replacing it (complete sale).
Sale Configuration
- Sell Main Property: Toggle to enable sale
- Sale Age: Age when property is sold
- Sale Value: Expected sale price
- Transaction Costs (%): Real estate fees, legal costs (typically 3-4% in NZ)
- Subject to Brightline Tax: Whether capital gains tax applies (investment properties sold within brightline period)
Sale Proceeds Allocation
Pay Off Debt: When enabled, allocate specific dollar amounts from sale proceeds to pay off debt on any property (not just the property being sold).
For each property with debt:
- Property 1 Debt: $X
- Property 2 Debt: $Y
- Property 3 Debt: $Z
...
Total Debt Allocation = $X + $Y + $Z
Allocate to Investments: When enabled, allocate remaining proceeds (after debt repayment and transaction costs) to investment funds as percentages.
For each active investment fund:
- Fund 1: X%
- Fund 2: Y%
- Fund 3: Z%
Total must equal 100%
Complete Sale Example:
Property Sale at Age 65:
- Sale Value: $1,200,000
- Transaction Costs: 4% = $48,000
- Available Proceeds: $1,152,000
Debt Allocations:
- Property 1 (being sold): $150,000 (pay off remaining mortgage)
- Property 2 (rental): $100,000 (partial paydown)
Total Debt Allocation: $250,000
Remaining for Investments: $1,152,000 - $250,000 = $902,000
Investment Allocation:
- Conservative Fund: 60% = $541,200
- Balanced Fund: 40% = $360,800
Total: $902,000
Result:
- Property 1 sold and removed from portfolio
- Property 1 debt cleared: $150,000
- Property 2 debt reduced by $100,000
- $902,000 added to investment funds
Transaction Costs Calculation:
Transaction Costs = Sale Value × (Transaction Costs % / 100)
Net Proceeds = Sale Value - Transaction Costs
Brightline Tax: If the property is subject to brightline tax (investment property sold within 2-10 years depending on purchase date):
Capital Gain = Sale Value - Original Purchase Price
Brightline Tax = Capital Gain × Marginal Tax Rate
Net Proceeds = Sale Value - Transaction Costs - Brightline Tax
Downsizing (Property 1 Only)
Selling the main property and purchasing a smaller, less expensive property. The proceeds difference is available for debt repayment and investments.
Downsize Configuration
- Downsize: Toggle to enable
- Downsize Age: Age when downsizing occurs
- New Property Value: Purchase price of the smaller property
Downsize Proceeds Allocation
Similar to property sale, you can:
- Pay Off Debt: Allocate specific dollar amounts to pay down debt on any property
- Allocate to Investments: Allocate remaining proceeds to investment funds (as percentages totaling 100%)
Downsize Calculation:
Current Property Value at Downsize Age = Property Value × (1 + Growth Rate)^Years
New Property Value = Smaller property purchase price
Downsize Proceeds = Current Property Value - New Property Value
Available for Allocation = Downsize Proceeds (no transaction costs on downsize)
Complete Downsize Example:
Downsizing at Age 68:
- Current Property (grown): $1,100,000
- New Smaller Property: $650,000
- Downsize Proceeds: $450,000
Debt Allocations:
- Property 1: $80,000 (pay off remaining mortgage)
- Property 3: $70,000 (reduce rental property debt)
Total Debt Allocation: $150,000
Remaining for Investments: $450,000 - $150,000 = $300,000
Investment Allocation:
- Conservative Fund: 70% = $210,000
- Income Fund: 30% = $90,000
Result:
- Property 1 replaced with smaller property
- $150,000 debt paid down
- $300,000 added to investments
- Ongoing property expenses and rates reduced
Why Downsize:
- Reduce maintenance costs and ongoing expenses
- Free up equity for retirement income
- Transition to more manageable living situation
- Generate capital for investment income
Upsizing (Property 1 Only)
Selling the current main property and purchasing a larger, more expensive property. The funding gap is covered by additional sources and/or new debt.
Upsize Configuration
- Upsize: Toggle to enable
- Upsize Age: Age when upsizing occurs
- New Property Value: Purchase price of the larger property
- Current Property Sale Price: Sale price of the current property
Additional Funding Sources
The gap between the sale price and new property value is covered by:
- Savings: Cash from savings account
- Investment Funds (1-5): Liquidation from specific investment funds
- Gifting: Gifts or family assistance
- Debt: Additional mortgage (automatically creates a new "Upsize Loan")
- Other: Any other sources
Upsize Calculation:
Funding Gap = New Property Value - Current Property Sale Price
Additional Funding Required = Funding Gap
- Covered by sources (savings, investments, gifting, other)
- Remaining gap covered by debt (creates upsize loan)
Upsize Loan: When debt is used as a funding source, the system automatically creates a special "Upsize Loan" with:
- Debt Amount: The amount specified in the debt source field
- Loan Term: 25 years (default)
- Interest Rate: Inherited from primary loan or system default
- Cannot be manually edited (controlled by upsize settings)
Complete Upsize Example:
Upsizing at Age 42:
- New Property Value: $1,200,000
- Current Property Sale Price: $800,000
- Funding Gap: $400,000
Additional Funding Sources:
- Savings: $50,000
- Investment Fund 1: $100,000
- Investment Fund 2: $50,000
- Gifting: $50,000 (family contribution)
- Debt: $150,000 (creates upsize loan)
Total Funding: $400,000 ✓
Result:
- Property 1 replaced with larger property ($1,200,000)
- Savings reduced by $50,000
- Investment Fund 1 reduced by $100,000
- Investment Fund 2 reduced by $50,000
- New "Upsize Loan" created: $150,000
- Total property debt increased by $150,000
Why Upsize:
- Growing family needing more space
- Career progression enabling larger home
- Investment in higher-growth property market
- Lifestyle upgrade
Income from Property
Rental Income (Taxable)
Annual rental income received from the property. This is taxable income added to the member's total income for tax calculation.
- Receive Rental Income: Toggle to enable
- Annual Rental Amount: Gross annual rental income
- Start Age: When rental income begins
- End Age: When rental income ends
Rental Income Growth: By default, rental income increases with inflation. Optionally, you can use a Property Yield approach:
- Increase by Yield: Toggle to use yield-based growth
- Property Yield (%): Annual rental yield, calculated as (Annual Rental / Property Value) × 100
When yield-based growth is enabled, rental income increases as the property value increases:
Rental Income (Year N) = Property Value (Year N) × (Property Yield % / 100)
Rental Income Example (Inflation-Based):
Annual Rental: $25,000
Inflation: 2.5%
Start Age: 40
End Age: 65
Age 40: $25,000
Age 41: $25,000 × 1.025 = $25,625
Age 42: $25,625 × 1.025 = $26,266
...
Age 65: $25,000 × (1.025)^25 = $46,404
Rental Income Example (Yield-Based):
Initial Property Value: $500,000
Property Growth: 5% per year
Property Yield: 5%
Age 40:
Property Value: $500,000
Rental Income: $500,000 × 5% = $25,000
Age 45:
Property Value: $500,000 × (1.05)^5 = $638,141
Rental Income: $638,141 × 5% = $31,907
Age 50:
Property Value: $638,141 × (1.05)^5 = $814,447
Rental Income: $814,447 × 5% = $40,722
Tax Treatment: Rental income is added to the property owner's taxable income and taxed at their marginal tax rate (up to 39% in NZ).
Board Income (Non-Taxable)
Annual board income received from the property. This is typically payments from boarders or flatmates and is non-taxable under NZ tax law (within limits).
- Receive Board Income: Toggle to enable
- Annual Board Amount: Annual board income
- Start Age: When board income begins
- End Age: When board income ends
Board Income Example:
Board Income: $8,000 per year (e.g., $150/week)
Inflation: 2.5%
Age 35: $8,000 (non-taxable)
Age 40: $8,000 × (1.025)^5 = $9,051
Age 45: $9,051 × (1.025)^5 = $10,247
This income is added to net cashflow without any tax deduction.
Property Expenses
When rental income is enabled, the system tracks detailed property expenses with individual inflation rates.
Property Expense Manager allows creating multiple expense items:
- Description: Type of expense (e.g., "Rates", "Insurance", "Maintenance", "Property Management")
- Amount: Annual amount for this expense
- Inflation Rate (%): Individual inflation rate (e.g., rates may increase faster than general inflation)
- Start Age: When this expense begins
- End Age: When this expense ends
Multiple Property Expenses Example:
Investment Property Expenses:
1. Council Rates:
- Amount: $3,500/year
- Inflation: 4% (local government increases)
- Ages: 40-65
2. Insurance:
- Amount: $1,800/year
- Inflation: 5% (insurance market increases)
- Ages: 40-65
3. Property Management:
- Amount: $2,000/year
- Inflation: 2.5% (standard inflation)
- Ages: 40-65
4. Maintenance Reserve:
- Amount: $2,500/year
- Inflation: 3%
- Ages: 40-65
Total Property Expenses (Age 40): $9,800/year
Each expense grows independently at its own inflation rate.
Total Property Expenses: The sum of all individual expense items. This is deducted from cashflow and can be used for tax deductibility calculations.
Offset Account
An offset account is a savings account linked to a mortgage where the balance reduces the amount of interest charged on the loan.
- Offset Account Balance: Amount in the offset account (in today's dollars)
Offset Account Calculation:
Effective Loan Balance = Loan Principal - Offset Account Balance
Interest Charged = Effective Loan Balance × Interest Rate
Offset Account Example:
Loan Balance: $400,000
Offset Account Balance: $50,000
Interest Rate: 6.0%
Without Offset:
Annual Interest = $400,000 × 6.0% = $24,000
With Offset:
Effective Balance = $400,000 - $50,000 = $350,000
Annual Interest = $350,000 × 6.0% = $21,000
Interest Savings = $3,000 per year
Why Use an Offset Account:
- Maintains full access to savings while reducing interest
- No loss of KiwiSaver first home withdrawal eligibility
- Flexibility to withdraw offset funds when needed
- Interest savings without formally paying down principal
Important Note: The offset account balance remains constant in the model (in real terms). It does not accumulate additional deposits or grow with interest.
Interest Tax Deductibility
For investment properties (rental properties), mortgage interest may be partially or fully tax-deductible.
- Interest Tax Deductible (%): Percentage of mortgage interest that can be deducted from taxable income (0-100%)
Interest Deductibility Calculation:
Total Mortgage Interest Paid = Sum of all loan interest for the year
Deductible Interest = Total Mortgage Interest × (Deductibility % / 100)
Taxable Rental Income = Gross Rental Income - Property Expenses - Deductible Interest
Tax on Rental Income = Taxable Rental Income × Marginal Tax Rate
Complete Rental Property Example:
Investment Property at Age 45:
Property Value: $650,000
Loan Balance: $450,000
Interest Rate: 6.5%
Rental Income: $32,000/year
Property Expenses: $10,500/year
Interest Deductibility: 50%
Owner's Marginal Tax Rate: 33%
Step 1: Calculate Mortgage Interest
Annual Interest = $450,000 × 6.5% = $29,250
Step 2: Calculate Deductible Interest
Deductible Interest = $29,250 × 50% = $14,625
Step 3: Calculate Taxable Rental Income
Gross Rental Income: $32,000
Less Property Expenses: -$10,500
Less Deductible Interest: -$14,625
Taxable Rental Income: $6,875
Step 4: Calculate Tax
Tax on Rental Income = $6,875 × 33% = $2,269
Step 5: Calculate Net Rental Income
Gross Rental Income: $32,000
Less Property Expenses: -$10,500
Less Total Interest (actual): -$29,250
Less Tax: -$2,269
Net Rental Income: $-19 (slightly negative cashflow)
Tax Benefit from Deductibility:
Without Deductibility (0%):
Taxable Income = $32,000 - $10,500 = $21,500
Tax = $21,500 × 33% = $7,095
With 50% Deductibility:
Tax = $2,269
Tax Saving = $7,095 - $2,269 = $4,826/year
Impact Over Time: As interest deductibility reduces (phase-out), the net rental income decreases and the property may require additional funding from other income sources during the phase-out period, until rents increase sufficiently or debt reduces.
Property Ownership Period
The system tracks when each property is owned based on:
- Purchase age (if purchase details are enabled)
- Sale age (if property is sold)
- Downsize age (if property is downsized)
- Upsize age (if property is upsized)
Ownership Constraints:
- Rental income can only be received during the ownership period
- Mortgage payments apply during the ownership period
- Property expenses apply during the ownership period
- Property value growth applies during the ownership period
Multiple Properties
The system supports up to 5 properties, each with independent:
- Values and growth rates
- Multiple loans with different terms
- Income streams (rental and board)
- Expense structures
- Repayment strategies
Cross-Property Operations:
- Property Equity: Can use equity from one property to purchase another
- Debt Allocation: Sale/downsize proceeds can pay down debt on any property
- Lump Sum Payments: Can come from any funding source
Summary of Key Calculations
Property Value Growth
Property Value (Year N) = Property Value (Year N-1) × (1 + Growth Rate / 100)
Mortgage Payment (Principal + Interest)
Monthly Rate = Annual Rate / 12 / 100
Num Payments = Term × 12
Monthly Payment = Principal × [r(1+r)^n] / [(1+r)^n - 1]
Annual Payment = Monthly Payment × 12
Interest-Only Payment
Annual Payment = Loan Balance × (Interest Rate / 100)
Offset Account Interest
Effective Balance = Loan Balance - Offset Account Balance
Interest = Effective Balance × (Interest Rate / 100)
Net Rental Income (After Tax)
Gross Rental Income
- Property Expenses
- Total Mortgage Interest (actual)
- Tax on [Rental Income - Expenses - Deductible Interest]
= Net Rental Income
Sale Proceeds Allocation
Sale Value
- Transaction Costs (Sale Value × Transaction Costs %)
= Gross Proceeds
Gross Proceeds
- Debt Allocations (specific $ amounts)
= Remaining for Investments
Remaining × Investment Fund % = Amount to Each Fund
Downsize Proceeds
Current Property Value
- New Property Value
= Downsize Proceeds
Downsize Proceeds
- Debt Allocations
= Remaining for Investments
Upsize Funding
New Property Value
- Sale Price
= Funding Gap
Funding Gap
- Savings
- Investment Funds
- Gifting
- Other
= Remaining Gap (covered by new debt)
Advanced Scenarios
Scenario 1: Main Home with Future Investment Property Purchase
Property 1 (Main Home):
- Current Value: $900,000
- No debt (paid off)
- Living in property (no rental income)
Property 2 (Future Investment - Purchase at Age 45):
- Purchase Price: $550,000
- Purchase Age: 45
- Deposit Sources:
- Savings: $100,000
- Investment Fund 1: $50,000
- Debt: $400,000 (80% LVR)
- Loan: $400,000 at 6.5%, 25-year term
- Rental Income: $28,000/year
- Property Expenses: $9,000/year
- Interest Deductibility: 0% (post-2021 purchase)
Scenario 2: Downsize with Debt Repayment Strategy
Age 68 Downsizing:
- Current Main Home Value: $1,200,000 (after growth)
- New Downsized Home Value: $750,000
- Downsize Proceeds: $450,000
Debt Allocations:
- Property 1 Remaining Debt: $120,000 (pay off)
- Property 2 (Investment) Debt: $180,000 (pay off)
- Total Debt Paid: $300,000
Investment Allocation:
- Remaining: $150,000
- Conservative Fund: 100%
Result:
- Debt-free main home
- Debt-free investment property
- $150,000 added to investments
- Reduced ongoing expenses
Scenario 3: Multiple Loans with Mixed Interest Strategies
Property 1 (Main Home - $1,000,000):
Loan 1 - Fixed 2-Year Portion:
- Amount: $300,000
- Rate Structure:
- Years 1-2: 5.5%
- Years 3-5: 6.0%
- Years 6+: 6.5%
Loan 2 - Floating Portion:
- Amount: $200,000
- Min Rate: 5.0%
- Max Rate: 8.0%
- Std Dev: 1.5%
Offset Account:
- Balance: $75,000 (applies to Loan 2)
- Reduces effective floating balance to $125,000
Scenario 4: Property Ladder Strategy
Age 30-35: First Home Purchase
- Property 1: $500,000
- Deposit: $100,000 (KiwiSaver + Savings)
- Debt: $400,000
Age 40: Keep as Rental, Purchase New Main Home
- Property 1: Now rental ($650,000 value, $320,000 debt)
- Property 2: New main home $800,000
- Deposit: $150,000 (savings + equity from Property 1)
- Debt: $650,000
Age 50: Upsize Main Home
- Property 2: Sell for $1,000,000
- Property 3: Purchase for $1,300,000
- Sale proceeds: $1,000,000
- Additional debt: $300,000
Age 68: Downsize and Simplify
- Sell Property 1 (rental): $1,100,000
- Downsize Property 3: From $1,800,000 to $1,000,000
- Pay off all debt
- Invest proceeds in balanced portfolio