Advice matters
Do you have a mortgage exit strategy?

When you took out your home loan, you might not have been thinking much beyond how you’d make the payments for the first couple of years. But as time goes on, things might not exactly go to plan.

It might be helpful to think about what your mortgage exit strategy could be, if it turned out that you needed a plan B.

Paying it off

For most people, this is their primary strategy. They make the payments over the course of the loan, and end up mortgage-free at the end of it.

This plan can be a good one over the long term, but it’s helpful to remember that interest rates will fluctuate and your circumstances can change. Would you be able to cope if interest rates increased significantly, or your income dropped for a while?

You might choose to set up an emergency fund for that sort of potential rainy day, or make extra repayments while you can, to get ahead and reduce your debt. Keep in mind, however, that if you are on a fixed-term mortgage rate, you can usually only pay extra up to a certain limit without incurring an early repayment fee. Get in touch or check with your lender what their threshold is, as this fee could offset your interest savings.

If you can do so without being charged a fee, making higher repayments can make a big difference because you not only can get debt-free faster, but you save money on future interest costs. Any extra money you put on the loan goes straight to reducing the principal owing. It may also give you extra flexibility if you need to reduce your payments in future, depending on your lender.

But if it’s likely that you’re going to retire before your home loan is paid off, or you think you may need to exit your loan before you clear it, you might need to consider some other strategies, too.


A simple way to exit your mortgage is to sell the property. This can work well if you’ve built up a significant amount of equity. What this relies on, though, is having a plan for where you would live instead.

Would you be able to downsize to a cheaper, smaller property, or something in a different part of the country? Would you have the cash flow to be able to rent? Or would you have family you’d be able to live with?

Selling a house at the average price in Auckland, for example, and buying at the average price in Whangarei, for example, could free up $300,000 or so.

Using other investments

If you have other investments, you may be able to use these to clear your mortgage.

If you’re worried about being mortgage-free when you retire, you might plan to tap into your KiwiSaver when you’re able to access that money. Otherwise, you might have other investments growing that you could use to clear your loan. You may also be considering a potential inheritance as part of an exit plan, although these can be tricky to predict accurately.

Time to talk?

If you’re paying off a home loan and starting to think about the longer term, drop us a line. We can talk you through the various exit strategies that are available to you, and what might be a good fit. Whether it’s insurance as a backup, or powering through your mortgage repayments more quickly, we are here to help. 

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.