Net equity
The net equity of a house, boat or vehicle is the amount of money the owner can get from the sale of the item once they've paid any debt owed on it.
For example, when a client does not have a loan to help pay for a boat their net equity is the total amount of cash they could get for selling the boat.
When a client got a loan to pay for an item, their net equity is the total value of the item minus the money they still owe on the item.
House and land
Only assess the net equity of house and land not used as the client's principal place of residence.
When assessing net equity on a house and/or land, use the rateable valuation or the amount insured. Use the higher value.
Example
House valued at | $100,000 |
Land valued at | $100,000 |
Total combined value | $200,000 |
Less outstanding Mortgage principal | $150,000 |
Net equity | $50,000 |
Some District Councils only use the Capital value of a property, this will be noted on the rate notice. In these cases the Capital value is the value of both the house and land value combined.
Example
Capital value | $200,000 |
Less outstanding Mortgage principal | $150,000 |
Net equity | $50,000 |
Boat or caravan
Boats or caravans used by the client or a member of their family for day-to-day accommodation are not considered a cash asset.
The value of leisure boats or caravans will be the insured value. When the leisure boat or caravan is not insured, the client will be required to provide, and pay for, written verification of:
- the leisure boat's value from a boat dealer and/or
- the caravan's value from a caravan dealer
Example
Boat valued at | $10,000 |
Less outstanding loan on boat | $3,000 |
Net equity | $7,000 |
Vehicle
When assessing the net equity of a vehicle use the estimated value of the vehicle.
Do not assess the net equity of any vehicle used by the client or their partner for their personal use (this is limited to 1 vehicle for a single person or 2 vehicles for a couple).
Example
Vehicle valued at | $15,000 |
Less outstanding loan on vehicle | $7,000 |
Net equity | $8,000 |
Client has more than one vehicle
When a client has more than one vehicle, you will need to assess whether the vehicles are used for private use.
Example
A family of 3 adults own 5 vehicles and all are claimed to be used for personal use. One is a vintage car used for Sunday outings and another a 4-wheel drive used on weekends only.
The 4-wheel drive and vintage car are additional to the needs of the family. Therefore, for Bond Grant purposes, the net equity of these vehicles will need to be assessed.
