The Mortgage Lifecycle

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"If you set the right goals. You can achieve them and enjoy your rewards."

Blandon Leung – Co-Founder of mortgagehq

Everyone loves big goals. But. Big goals don’t help you take immediate action. 

  • You may dream of a life where you are 100% confident your kids eat healthily, are well educated, and you can help them into their first home.
  • You may dream of starting a business. And you imagine starting from a position of strength, like being mortgage-free.
  • You may not care much about money as a goal. But dream of the freedom to follow your passions.
  • You may dream of becoming a developer and building homes for Kiwis to live in.

But how do those dreams help you today, and tomorrow? They don’t. Use the Mortgage Lifecycle to break down big goals into actionable steps.

"The purpose of education is to replace an empty mind with an open one."

Malcolm Forbes – Founder of Forbes Magazine

A few homeowners come to us because they want to get mortgage free in 7 years! Most however wouldn’t dare dream of such an audacious goal. You may not even believe it is achievable. Your mind may be completely closed to the possibility – and if you approach that goal without a plan – you won’t achieve it. But we’ve helped ambitious homeowners achieve this crazy goal over and over again. 

We’ve now gone full circle and described the path that these clients have taken to achieve their dreams. We’ve called it the Mortgage Lifecycle, and it is helping new clients follow through to achieve their own financial freedom. 

You can use the mortgage lifecycle to assess where you are right now, and what you should be working towards over the long term. Most importantly though, you can use it to identify what you should do right now. 

"Risk comes from not knowing what you're doing."

Warren Buffett. Billionaire investor aka The Oracle of Omaha

But learning a new skill, industry or investment strategy is difficult and frequently overwhelming. Where to start? What to learn first? What to learn second? What should my goals be? 

Without being able to answer these questions you will sporadically learn but usually fail to learn a holistic system that would enable you to take action. More information just results in confusion and false starts in several directions. After developing the Mortgage Lifecycle we have created structured relevant education pathways for you that promote quick wins whilst building towards long term goals.  

What is the mortgage lifecycle?

After talking with well over 5,000 people we found that most people’s passive income goal was around $120,000 per year. So the Mortgage Lifecycle was created as a pathway from your first home through your first investment property and all the way to earning $120,000 of annual portfolio profit from property investments. 

Obviously, before you buy your first home you don’t have a mortgage. This wasn’t designed to help you buy your first home, but rather to take homeowners on a journey to become profitable property investors. Unfortunately the Mortgage Lifecycle is not the default path, most Kiwis never leave Stage 1. Instead of building a plan (or following ours) every 3-7 years they upgrade their home maxing out their mortgage again – this is the exact problem we are helping clients solve by introducing them to this concept. 

Each stage in the Mortgage Lifecycle suggests a goal to work towards – which also acts as the ‘gateway’ into the next stage. Meaning that as soon you achieve your goal for Stage 1 you are then ready to work towards achieving your goal for Stage 2. Let’s take it stage by stage.

Entry point: buying your first home.

Homeowners get overwhelmed when they have a 30 year mortgage hanging over their head and no plan on how to pay it off significantly faster than that. Your aim while in stage 1 is to reduce your mortgage as fast as possible. This then creates two options for you. Either continue paying it down with your income, or recycle your home’s equity and start building your investment portfolio which can pay your mortgage off for you.

Goal: build $150,000 or more of usable equity.

Win: save hundreds of thousands of dollars of interest by slashing your mortgage early.

Entry point: $150,000 or more of usable equity* or cash.

Realising you can recycle equity out of your home into an investment property is a great moment to have, but caution, rushing into an investment property is not the fastest way to success. Your goal while in stage 2 is to buy properties that fulfill a specific goal in your larger plan. We’ve seen many people who have bought the wrong first property which has slowed their progress down as they’ve been stuck – unable to get financing for additional properties. We navigate you through this by looking ahead at how this investment will affect your future options. Will this purchase allow you to go on and buy another property – or will it stop you in your tracks?

*Usable equity in your home (Value of home x 80% Less your mortgage)

Goal: Buy your first 3 investment properties to build $80,000 of rental income whilst increasing your equity.

Win: Sleep easy knowing you have created your financial safety net and certainty you’ll reach financial freedom.

Entry point: 1 million dollars of property investment equity*.

Over time your plans change, the environment changes and bank policies change. Even if you followed a plan you need to continually reassess how you’ve allocated your capital. What are your new big goals? How can we transform your portfolio to achieve these goals? Do you need to trade properties (sell to buy again)? Do you need to restructure your mortgage to reduce cross-securities? Has your portfolio become lazy (large value but reduced cashflow and capital gains)? This stage is about carefully reshuffling lending, properties, strategies to ensure your hard work is going to pay maximum dividends in the years to come.

*Total equity in your investment portfolio (Value of Portfolio Less Mortgages against Portfolio)

Goal: Unlock maximum returns from your portfolio.

Win: An optimized portfolio that is achieving your new goals, whether that be cash flow so you can quit your job, or opportunities for large equity gains.

What stage are you in?

You may be able to work out for yourself what stage you are currently at in your journey to $120,000 of annual portfolio profit, alternatively take the quiz below to discover your stage. 

Right now, you should focus on education and numbers.

Why numbers? A clear understanding of your life’s numbers and your investing numbers causes them to become your guiding light and enable you to take action, even when others are fearful or can’t see any opportunities. 

As humans we are not inherently good at statistics or numbers based decision making. Most people would feel uncomfortable taking a 10% chance on an investment and not do it. But let’s get statistical look at how “bets” like that eventuate…

Imagine that this chance costs $1,000 and you have 10 opportunities like this. What will happen?

This is an extreme example as investing in property historically does not come with a 90% chance of your investment becoming worthless :). But the point is important, when you understand the numbers you are empowered to take actions that can earn you a lot of money – even in opportunities that at first glance don’t look good. In fact often these bad looking opportunities are the best available because they have been passed over by most people which lowers your purchase costs. But only if the numbers stack up for your goals and situation.

Right now I encourage you to focus on three things:

  1. Get 100% clear on your current situation. What is your income, what is your usable equity, is your mortgage structured correctly?
  2. Get 100% clear on your long term goal. Are you trying to get mortgage free? Or build $120,000 of annual portfolio profit? Or something more ambitious?
  3. Work backwards from your long term goal to create short term goals, and then actual tasks to complete to get there.

We can help!

To talk with someone from our team, book a 10-minute introductory call. This is a no-pressure, no-obligation call. Our team will help you clarify your situation and goals, and then when you are ready he will match you with an adviser from our team. 

What can I learn to generate more profit?

We have a free article video library with a huge variety of content to learn from. But the clients who see the most dramatic financial success go a step beyond and take advantage of our structured education. 

Our Masterclasses

We have three masterclasses, each one tailored to a stage in the mortgage lifecycle. Each masterclass delivers you relevant strategies, structures, hacks and advice to achieve your immediate goal as fast as possible. 

Each masterclass is around an hour long, available on demand from our site and has a small cost to purchase access. Included in the masterclass is a condensed PDF slide deck you can download for studying and a spreadsheet calculator to facilitate your number crunching!

Stage 1: Mortgage Reduction

For those with a home.
Restructure your mortgage and property to pay it off in half the time.

Stage 2: Mortgage Expansion

For those with home equity or cash.
Set yourself up to buy 3 investment properties in 5 years.

Stage 3: Mortgage Optimisation

For those with a portfolio.
Transform your portfolio into a profit machine.

3 Property Accelerator

The 3 Property Accelerator is a 7 day sprint. It serves as an introduction to the Property Formula Workshop as students upgrade at any time – receiving a credit from this course’s cost to the investment into Property Formula Workshop. Over the 7 day sprint you will learn the core principles and strategies at a deep level to progress through Stage 2 | Expansion.

Property Formula Workshop

The property formula workshop is a 8 week course, delivered online at your own pace.  The 8 week format allows you to get step by step instruction on how to achieve your goals and propel yourself through the Mortgage Lifecycle to financial independence. This course equips you to master Stage 3 | Optimization. APPLICATION ONLY.