Outright vs Mortgaged Ownership Comparator
Same property, two financing structures. Compare IRR, year-1 cashflow, and exit proceeds — to see whether leverage is helping you or just amplifying your bet.
Leverage amplifies returns when capital growth is positive and the property pays its mortgage. It also amplifies losses if either fails. Compare IRR but also year-1 cashflow — a strong IRR that depends on the exit is a different bet than one that pays you every year.
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How to interpret your results
- Scenario A defaults to outright (0% LTV). Scenario B defaults to 65% LTV. Move either to model the structure you're considering.
- Higher LTV usually produces higher IRR — but only if capital growth is positive and the property covers its mortgage. If either fails, leverage works against you.
- Compare year-1 cashflow as well as IRR. An IRR built on exit gain is more fragile than one paid in annual rent.
- Same operating costs and rent growth apply to both scenarios — the difference is purely the financing.
What this doesn’t include
Stamp duty, transaction fees, mortgage arrangement fees, and any prepayment penalties on early repayment. These vary too much to model generically. For tax-aware after-tax IRR by jurisdiction, see AssetCentral's portfolio workspace.
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