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Paying off a mortgage
What an extra payment is worth, what fixing costs, and what a reverse mortgage does to the equity in a home.
16 situations worked through, 12 of them with the sums shown. Each one links to the guide that sets out the rules behind it, and that guide is where any rate or threshold is kept current.
The people in these situations are illustrations written to show how the rules land on somebody, not real customers and not case histories. The arithmetic is real and the rules are real; the names and the circumstances are made up to teach.
Nothing on this page matches that. Try a shorter word, or the full list of situations.
Mortgage Fundamentals
Sarah & Tom - First Home Buyers
Young professional couple buying their first home in Auckland. Combined household income $140,000.
- Property price: $750,000
- Deposit saved: $150,000 (20%)
- Mortgage required: $600,000
- LVR: 80%
- Loan term: 30 years
Mike - Investment Property
Mike owns his own home and is buying his first investment property. Income $95,000.
- Investment property price: $550,000
- Deposit required (30%): $165,000
- Mortgage: $385,000
- Expected rent: $600/week ($2,600/month)
Mike chose interest-only to maximise cashflow in early years. He's betting on property appreciation rather than equity build-up through repayments. After 5 years, if the property value increases to $650,000, his equity grows from $165k to $265k despite not paying down principal.
Jennifer - Refinancing Decision
Jennifer's 2-year fixed rate is expiring. Her mortgage has reduced from $450,000 to $420,000. Property now valued at $850,000.
- Outstanding mortgage: $420,000
- Property value: $850,000
- Current LVR: 49% (down from 60%)
- Current rate expiring: 7.9% fixed
David & Lisa - Extra Repayments Impact
Young professionals wanting to be mortgage-free as soon as possible. Both 32 years old, combined income $165,000.
- Mortgage: $480,000
- Interest rate: 7%
- Original term: 30 years
- Standard monthly payment: $3,194
Robert - Rate Comparison Strategy
Robert's mortgage is coming off a fixed term. He's evaluating different rate structures for his $380,000 mortgage.
- Rate: 8.5% floating
- Monthly payment: $2,920
- Pros: Flexibility, no break fees, can make unlimited extra payments
- Cons: Highest rate, could increase further, payment uncertainty
Robert's split strategy costs slightly more than going all fixed 3-year ($166/month or $40/week), but gives him significantly more flexibility and shorter commitments. If rates drop by 1%, his floating portion saves him $1,583/year, making the split strategy better than all-fixed.
Home Loan Repayment Guide - Mortgage Planning
First Home Buyers in Wellington
Meet Sarah and Tom, both 28, buying their first home
- Combined income: $130,000/year
- KiwiSaver combined: $80,000
- Additional savings: $40,000
- Total deposit available: $120,000
Refinancing to Save Money
Mike's situation: 5 years into a 30-year mortgage
- Loan amount: $400,000
- Interest rate: 7.5%
- Term: 30 years
- Monthly payment: $2,797
Upgrading Family Home
The Chen family: selling starter home, buying larger property
- Purchased 7 years ago: $450,000
- Original loan: $360,000 (20% deposit)
- Current value: $620,000
- Remaining loan balance: $317,850
- Equity: $302,150
Interest Rate Rise Impact
Lisa's scenario: Fixed rate ending, facing higher rates
- Loan: $550,000
- 2-year fixed rate: 4.5%
- Monthly payment: $2,787
- Comfortable and affordable
Lisa's experience is common. When rates rose in 2022-2024, many NZ homeowners faced 20-40% payment increases when refixing. Always stress-test your budget at rates 2-3% higher than current. If you can't afford that, you're borrowing too much.
Complete Mortgage Mastery Guide
The Break Fee Mistake
James: Emotional refinancing without math
- Broke contract without calculating break fee
- Break fee: $380K × (6.80% - 5.80%) × 1.5 = $5,700
- Plus legal/valuation: $1,500
- Total cost: $7,200
Term Selection Mastery
Linda: Strategic term choice based on life plan
- Age: 35
- Target: Mortgage-free by 60 (retirement)
- Loan: $480,000
- Years available: 25
The Budget Reality Check
Mike & Emma: Learned the hard way about true housing costs
- Income: $110,000
- Bank approved: $550,000 loan
- Monthly mortgage: $3,476
- They thought: "We can afford $3,476"
Strategic Rate Splitting Success
David: Sophisticated rate management
This one turns on the rules rather than on a calculation, so there are no sums to show.
Reverse Mortgages NZ
Pat, 75, Tauranga
Took a $120,000 reverse mortgage without telling her adult children. Home value: $650,000.
This one turns on the rules rather than on a calculation, so there are no sums to show.
Stan and Wendy, 72, Napier
Considered a reverse mortgage of $80,000 for home modifications and daily expenses.
This one turns on the rules rather than on a calculation, so there are no sums to show.
Ruth, 82, Nelson
No children or close family. Home worth $550,000. Needed $40,000 for a walk-in shower, ramp, and home safety modifications.
This one turns on the rules rather than on a calculation, so there are no sums to show.
Saving and investing Running a business Buying a first home Running a household Debt you cannot pay Scams, faulty goods and your rights Changing or losing a job Separation, death and estates Understanding your pay and tax Owning a rental or holiday home
Every situation
Situations are taken from the guides listed above and are worked examples for education, not advice. Figures used in an example were current when the guide was written; the guide holds the maintained figure. Last reviewed 2026-09-07. See also the arithmetic on its own, every question the site answers and the guides.