International Currency Mortgage (ICM) New Zealand Case Study Sept 2004 – Sept 2007

Sam and Rachel contacted us in June 2004 after having just moved to Hong Kong from New Zealand. They had three properties in New Zealand that were at the time mortgaged through a local bank in New Zealand. Once the benefits of the ICM were fully explained to them they chose to refinance all three properties in order to benefit from increased cash flow along with the possibility of considerably reducing their capital borrowings over time through favourable currency movements.

Reduction of capital borrowings through favourable currency movements

On the 10th September 2004 they drew down on their new loan amount of NZD 638,000 in Japanese Yen (JPY) which was at the time offering value at 71c against the NZD. They now had a Yen mortgage of $45,298,000 and were paying NZD 2,390 per quarter on an interest only basis at 1.5% as opposed to their previous interest payments of NZD 9,173 per quarter. A saving of NZD 6,783 per quarter or NZD 2,261 per month.

Sam and Rachel continued with this new mortgage arrangement and remained in JYP for the next 4 quarterly payments. During November 05 however, approaching their 5th quarterly repayment date Sam and Rachel were advised that the JPY had weakened considerably throughout this period and, although it may continue on this trend, if they were to switch out of Yen then they would have not only benefited from a reduction in interest rate payments of NZD 45,868 throughout this period but they would also reduce their capital borrowings by NZD 98,738 or 15%. Sam and Rachel agreed with Lifestyle Brokers advice and on the 10th December 2005 switched back into NZD at 84c.

Sam and Rachel remained in NZD for the next 6 months and as predicted the NZD weakened quite dramatically which once again benefited them in two ways as firstly they had preserved the reduction in their capital amount that they had achieved in the first 15 months and secondly the NZD had now moved into a position where it was offering value against the CHF so on the 10th June 2006 Sam and Rachel switched their NZD 539,262 mortgage into CHF at 77.1c and were now paying just NZD 3,532 per quarter on an interest only basis at 2.62%.

Benefits from reduced interest rate payments

Sam and Rachel were once again able to benefit from reduced interest rate payments and over the next 12 months saved NZD 32,248. In the month leading up to the 10th June 2007 Lifestyle Brokers once again advised them that the NZD was looking considerably strong and if they were to switch back out of CHF they would reduce their Capital borrowings by NZD 97,423 or 18%. Sam and Rachel again agreed with Lifestyle Brokers and switched back into NZD on the 10th June and reduced their borrowings even further to now have a NZD mortgage of $441,839. The NZD strengthened a little further over the next month however as predicted had a huge fall in August 2007 and through Lifestyle Brokers 'Options' management service Sam and Rachel were able to avoid this crash and preserve NZD 97,423 of favourable capital reduction.

Significant savings through Multi-Currency Mortgage

Sam and Rachel began with a mortgage of NZD 638,000 and over a 3 year period they were not only able to save themselves NZD 78,116 in interest rate payments but were also able to reduce their mortgage by NZD 196,161 or 30% through favourable currency movements.