Reduce Debt - How to model a partial repayment (pay down) on a debt

To model the partial repayment of a mortgage, use the Expenses > Basics screen to step up the mortgage payment at a given event. If this is a one-off paydown, step the payment back down to regularly scheduled (or adjusted) levels in the following year of the plan. Instructions follow on how to do this.


To model a (one-off) partial repayment of a mortgage (not a payoff, which is even easier):

1. First add two events to the timeline. Go to the Time screen.

2. Drag and drop an event onto the timeline in the year these two windfalls/inflows are to be realised. Name it Mortgage Repayment, for example.

3. Place a second event in the following year of the plan. Name it Resume Regular Mortgage Payment, for example.

4. Go to the Expenses > Basics screen.

5. Select the Mortgage Payment expense for the property.

This is the expense that the software creates automatically when a debt is entered into a plan.

6. First expand the Inflation panel and select Future Value.

Normally it's best to leave this at the default, Present Value, however, in this case the Future Value will ensure that the future stepped mortgage payment amounts will be as you enter them and not inflated using the inflation rate above, as would be the case if Present Value were selected.

7. Next, expand the Step Up / Step Down panel.

8. Select the first of the two events to schedule the overpayment. Enter the stepped up payment amount. Inflation rate can be left as is.

Another set of fields will display automatically on the Step Up / Step Down panel allowing you to enter an additional step.

9. Select the second of the two events and enter the regular mortgage payment amount, stepping it down to the usual amount in the year following the over payment.

10. Click Update to save these changes.

Check the details of the Let's See chart to verify that this is being modelled as expected.