Rates Postponement vs Reverse Mortgage Calculator NZ

This calculator compares two ways an older New Zealand homeowner can fund an ongoing cost like council rates without dipping into savings: postponing the rates through the council, or drawing the same amount each year from a reverse mortgage. Both let you stay in your home and tap its equity rather than paying cash now, and both build up a debt that is repaid when the home is eventually sold or the estate is settled, reducing what is left over. The difference is the interest rate. Council rates postponement usually charges interest at a relatively modest council rate plus a small administration fee, while a reverse mortgage typically charges a higher rate, so for funding the same yearly amount the reverse mortgage debt grows faster. You enter the annual amount you want to cover, the postponement interest rate, the reverse mortgage interest rate, and the number of years, and the calculator compounds each year's draw and shows the total owed under each option and the difference between them. Use it to see how much the gap matters over five, ten or twenty years. This is a simplified comparison that ignores fees and rate changes, and eligibility rules apply to both, so confirm the current terms with your council and a reverse mortgage lender. Estimate only, not financial advice.

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Amount drawn a year

Postponement rate

Reverse mortgage rate

Years

Postponement owes about $6,859 less after 10 years

total debt built up under each option

Rates postponement$45,064

Reverse mortgage$51,923

Simplified; ignores fees and rate changes. Both reduce the equity left in your home. Eligibility applies. Confirm terms with your council and lender. Estimate only.

How it works

Each year's draw is added to the debt and compounds at the relevant interest rate until the end of the period. Mathematically this is the future value of a series of equal annual amounts, so the total owed is the yearly amount times the compounding factor for the rate and years. The calculator does this for both the postponement rate and the reverse mortgage rate and shows the difference.

Worked example

Drawing 3,500 dollars a year for 10 years, at 5.5 percent the postponed rates grow to about 45,064 dollars, while at 8.5 percent a reverse mortgage grows to about 51,923 dollars. Postponement owes roughly 6,859 dollars less over the period.

Related calculators

Reverse Mortgage: equity release detail.
Rates Bill 2026: the rates amount.
Equity Release vs Downsize: another option.
NZ Super Income Gap: retirement income.
Reverse Mortgages NZ: background on this topic.

Frequently asked questions

What is rates postponement?

Many councils let eligible older homeowners postpone, or defer, paying their rates. The postponed rates build up as a debt against the property, with interest at the council's rate plus a small fee, and are repaid when the home is sold or the estate is settled.

How does that compare with a reverse mortgage?

A reverse mortgage also lets you draw on your home's equity without selling, but the interest rate is usually higher than a council's postponement rate, so for funding the same amount the debt grows faster. Both reduce the equity left for you or your estate.

Which is cheaper?

For covering an ongoing cost like rates, postponement usually accrues less interest because the rate is lower. A reverse mortgage is more flexible for larger or lump-sum needs. Always check eligibility and the current rates and fees with your council and lender.