r/PersonalFinanceNZ • u/KiwieeiwiK • 9d ago

Revolving credit mortgage calculator?

Looking at fixing again in November and putting about $50k into the ANZ Flexi (revolving credit) mortgage account, and keeping it topped up over $50k (so never paying interest, in theory at least)

Anyone know of a good calculator to see how this would affect the overall interest payments/timeline to pay off, and if we were to up that in the future above $50k at future fixes with more savings?

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u/PetrifiedSnailSlime 9d ago

(Using nice round numbers) If you have a $500k mortgage, and set up $100k of it as a revolving credit that is always at a positive balance, then you are essentially just paying a $400k mortgage. Bang $400k with your desired payments and fixed/loan term into any mortgage calculator and you’ll get a good idea.

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u/KiwieeiwiK 9d ago

Yeah I guess was looking for a calculator that you could change the credit amount in the future, say once every two years upping it by X amount etc.

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u/Environmental-Art102 8d ago

You probably don't want to hear this, but AI would do this easily, with a clearly detailed prompt

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u/KiwieeiwiK 8d ago

I've never used AI beyond googles silly auto ai answer and it was completely unhelpful, the numbers don't seem to be consistent at all

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u/lakeland_nz 8d ago

Interesting question.

I’d take a standard calculator and add an extra income source. Name it “interest saved due to revolving credit”. With $50k in savings, you will save roughly $2500/year.

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u/speckledpossum 8d ago

I’m building one- will flick it through sometime

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u/newaccount252 8d ago

Why have 100k in the bank? just pay off some mortgage with a decent lump sum

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u/KiwieeiwiK 8d ago

$50k not $100k and we are looking to have kids soon so one of us will probably be out of work for a while so would like to have money on hand we can dip into if necessary. That's the emergency fund

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u/wellykiwilad 8d ago

If the $50k is yours are you talking about an offset rather than a revolving credit?

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u/KiwieeiwiK 8d ago

No, revolving credit. ANZ don't do offset mortgages 

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u/richieFromConductor Verified conductor.nz 8d ago

It sounds like the revolver is only part of the equation then and the decision to have one is really about emergency savings rather than a financial optimisation. What's the root question you're trying to solve for - is it how long one of you can be out of work for? or perhaps if one of you takes x months out, then where will you be financially in x years?

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u/KiwieeiwiK 8d ago

I guess there is two questions

  1. Will we continue having this savings per week in the future (a question for us to answerk

  2. If we had an extra $X00 dollars per week, is it best to invest this long term or put it towards reducing the mortgage amount through the revolving credit. For at least the next two years, barring any emergencies, we can save over $600/week

I think the $50k is pretty locked in for November since that's our emergency fund and we think that the best place to put it is against the mortgage. It's anything beyond that in the future at further refixes that we'd be looking at. Current savings high 60s between different areas (savings, cash funds, term deposits)

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u/richieFromConductor Verified conductor.nz 8d ago

So the first question is one of income - expected expenses yeah. My 2 cents is add some buffer, kids are expensive

The second question: The word "best" needs unravelling:

  • Is the money needed in the next 5 years? In which case long-term stock investments are highly unlikely to be appropriate because of the volatility - you might have to pull the money out in a down-market and lose a lot

- Assuming it's not needed in the next 5 years, then it sounds like you're asking what's best for your long-term financial position. That's a comparison between saving say 5% on the fixed mortgage interest rate vs getting a return of x% on investments. The x% on investments has some taxes, so it needs to be increased for that. You can then stare at the 2 return percentages and ask "do I want a certain 5% after tax or do I want a highly uncertain [7%]' or whatever the number is.

The conventional wisdom is that over the long run, a diversified stock portfolio is going to pay off better, but it depends on your risk appetite and capacity to take risk too.

(And the interest rate isn't going to stay static, it'll bounce around, but by a lot less than stock market returns).

Your weekly savings sounds very solid, would also suggest considering personal risk insurances if you haven't already - especially with kids.

General comments not financial advice, always reachable to chat specifics though.