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Turn Your $500,000 Mortgage Into a Wealth-Building Asset

Discover how debt recycling can help you pay off your home loan years fasterwhile building a tax-deductible investment portfolio

Many Australian homeowners have over $200,000 in unused equity. Imagine using that equity to build wealth and pay off your mortgage quicker! That's the power of debt recycling, making your interest tax-deductible.

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equity unlocked

$500M+

In equity unlocked

families helped

500+

Families helped

mortgage reduction

5 years

Average mortgage reduction

certified accountants

Chartered accountants

Certified accountants

What Is Debt Recycling?

The Strategy Banks Don't Tell You About

Debt recycling is a tax-effective wealth strategy that converts your non-deductible home loan debt into tax-deductible investment debt.

Instead of just making extra mortgage repayments (which aren't tax-deductible), you redirect that money into investments. As you pay down your home loan, you borrow against the equity to invest – and because the loan is for investment purposes, the interest becomes tax-deductible.

The result? You're building wealth through investments while your tax deductions help you pay off your home loan faster. It's like getting the ATO to help fund your mortgage.

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Traditional Mortgage Repayment

Traditional Mortgage Repayment

Monthly Payment

$2,000/month extra on mortgage

Tax Deductions

No tax deductions

Investment Growth

No investment growth

Mortgage Paid Off

In 20 years

Investment Portfolio

$0

Debt Recycling Strategy

Debt Recycling Strategy

Monthly Payment

$2,000/month extra on mortgage

Tax Deductions

Investment interest is tax-deductible

Investment Growth

Investment grows at 7% average

Mortgage Paid Off

In 15-17 years

Investment Portfolio

PLUS you own $400,000+ investment portfolio

Check

The Scenario

Real Example: Meet Sarah & James

See how debt recycling transformed their financial future

case-study icon

Starting Position

  • Home value: $800,000
  • Mortgage: $500,000
  • Available equity: $140,000 (80% LVR)
  • Household income: $180,000
  • Tax rate: 37%

What They Did

  1. Continued making regular mortgage repayments plus $1,500/month extra
  2. Every time they paid down $20,000, they redrew to invest in shares
  3. Investment loan interest became tax-deductible
Traditional Mortgage Repayment

Without Debt Recycling

Mortgage balance

$2,000/month extra on mortgage

No tax deductions

Investment portfolio

Tax deductions claimed

No investment growth

Net position

-$280,000

Debt Recycling Strategy

With Debt Recycling

Mortgage balance

$280,000

Investment portfolio

$220,000

Investment portfolio

$340,000

Tax deductions claimed

$61,000

Net position

+$40,000

Sarah and James are $320,000 better off while maintaining the same cash flow.

Calculate Your Potential Savings

$

$50,000

$2,000,000

$

$100,000

$5,000,000

%

0%

15%

%

0%

10%

%

0%

15%

%

0%

10%

years

1 year

30 years

$

Calculations are estimates only. Actual results may vary. Past performance is not indicative of future results. Investment growth assumed at 7% p.a., loan interest at 6.5% p.a.

Net Better Off

$109,914

Available Equity to Invest

Available Equity to Invest

$140,000

Years Saved on Mortgage

Years-off Mortgage

2 years

Net share wealth

Net Share Wealth

$266,105

Additional Monthly Cost

Additional Monthly Cost

$1,319/mo

Total Tax Deductions

Tax Deductibles Payments

$23,810

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The Debt Recycling Process: Step-by-Step

A clear roadmap to building wealth while paying off your mortgage

process process process process process
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Assessment & Setup

We review your financial position, mortgage structure, and investment goals to determine if debt recycling is right for you.

  • At least 20% equity in your home
  • Stable income to service debt
  • Suitable loan structure (offset or redraw facility)
  • Investment risk tolerance

Loan Restructure

We help you split your home loan into two accounts:

  • Account 1: Non-deductible debt (your home loan)
  • Account 2: Deductible debt (investment loan)
  • This separation is critical for ATO compliance and maximizing tax deductions

Initial Investment

You make extra repayments on your home loan, then redraw or borrow against the equity to invest.

Example: Pay an extra $20,000 off your mortgage, then borrow $20,000 against your equity to invest in shares or managed funds

Ongoing Cycle

You continue the cycle to progressively build wealth:

  • Make extra mortgage repayments
  • Redraw/borrow the same amount for investments
  • Claim tax deductions on investment loan interest
  • Use tax refunds to accelerate mortgage repayment
  • Repeat

Portfolio Growth & Monitoring

Your investment portfolio grows over time while your non-deductible debt decreases. We monitor your strategy and adjust as needed.

The end result: Your mortgage is paid off faster, you own a substantial investment portfolio, and you've saved thousands in tax along the way

Why Debt Recycling Works for Australian Homeowners

Five powerful advantages that make debt recycling a smart wealth strategy

Tax Deduction

Investment loan interest is tax-deductible, reducing your taxable income.

Tax Deduction

If you have a $200,000 investment loan at 6.5% interest, that's $13,000/year in interest. At a 37% tax rate, you save $4,810/year in tax.

Forced Wealth Building

The strategy forces disciplined investing while you pay down debt.

Forced Wealth Building

Most people struggle to invest consistently. Debt recycling builds it into your mortgage repayment routine.

Faster Mortgage Freedom

Tax savings accelerate your mortgage repayment timeline.

Faster Mortgage Freedom

Clients typically shave 3-7 years off their mortgage term.

Compound Growth

Your investments grow while you're paying down debt.

Compound Growth

A $200,000 investment growing at 7% for 15 years becomes $552,000.

Faster Mortgage Freedom

You can pause, adjust, or stop the strategy based on your circumstances.

Faster Mortgage Freedom

Life changes? Your strategy can change with it.

Free Download

The Complete Debt Recycling Guide

Get our comprehensive 18-page guide with everything you need to know about debt recycling in Australia

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Is Debt Recycling Right For You?

Find out if you're a good candidate for this wealth-building strategy

suitable candidate eligibility

You're a Good Candidate If

suitable candidate eligibility
  • You have less than 20% equity in your home
  • You have stable employment and income
  • You're already making extra mortgage repayments (or can afford to)
  • You're comfortable with investment risk over 7+ years
  • You're in a 32.5% or higher tax bracket
  • You want to build long-term wealth while paying off debt
not suitable candidate eligibility

This Strategy May Not Suit You If

not suitable candidate eligibility
  • You have less than 20% equity in your home
  • Your income is irregular or uncertain
  • You're uncomfortable with investment volatility
  • You're planning to sell your home in the next 3-5 years
  • You have high-interest consumer debt to clear first

Not sure?

Book a free consultation

and we'll assess your situation.

Common Questions About Debt Recycling

Get answers to your most important questions

Is debt recycling risky?

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Yes, debt recycling carries inherent risks that you should understand before starting. The strategy depends on investment performance and interest rates, so there's a chance your investments may not grow as expected, or their value could fall during market downturns. This could increase your total debt or delay your financial goals. The strategy also requires you to service additional investment debt alongside your mortgage, so you need stable income and financial reserves. However, risks can be managed through careful planning, diversified investments, professional advice, and ensuring you have a solid financial buffer. It's essential to discuss these risks with a qualified financial adviser before implementing this strategy.

How much equity do i need?

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You need at least 20% equity in your home to qualify for debt recycling. This typically means you should have an 80% loan-to-value ratio (LVR) or lower. For example, if your home is worth $800,000, you'd need at least $160,000 in equity (20%) to have $640,000 available to borrow against. The more equity you have, the more funds you can redirect into investments. Most lenders will allow you to access equity up to 80% LVR. You'll also need a mortgage structure with either a redraw facility or offset account to access this equity flexibly.

What investments should i use?

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The website recommends investing in shares, though the specific investments should align with your risk tolerance and financial goals. Suitable investment options typically include:

  • Diversified share portfolios (ASX-listed companies, ETFs, or managed funds)
  • Index funds or exchange-traded funds (ETFs) for broader market exposure
  • Australian or international shares

The key is ensuring your investment generates ongoing returns (capital growth and/or dividends) to help pay down your mortgage debt while creating a growing investment portfolio. It's important to choose investments you're comfortable holding for at least 7+ years, as shorter timeframes increase the risk that markets could be down when you need to access funds. A financial adviser can help tailor investment choices to your specific circumstances and tax situation.

Will this affect my mortgage repayments?

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Debt recycling doesn't change your regular mortgage repayments. You continue making the same monthly mortgage payments as before. However, the strategy does increase your total debt servicing because you're adding an investment loan on top of your home loan. The additional monthly cost depends on how much equity you're using to invest and current interest rates. For example, if you invest $100,000 at 6.5% interest, you'd service approximately $542/month in interest on that investment loan. This additional cost is typically offset by tax deductions on the investment loan interest, so your net cost is often lower. A financial adviser can calculate your exact additional monthly costs based on your situation.

How long does debt recycling take?

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The timeframe for debt recycling depends on your investment horizon and how much extra you can invest. The strategy typically accelerates your mortgage payoff by 3-7 years compared to traditional repayment. For example, a standard mortgage might take 20 years to pay off, but with debt recycling, you could reduce this to 13-17 years. However, the real benefit emerges over a longer period (10-20+ years) when compound investment growth becomes significant. A $200,000 investment growing at 7% for 15 years becomes approximately $552,000. Most people benefit most from debt recycling when they maintain the strategy for at least 7-10 years. Your personalised timeline depends on your income, how much extra you can invest monthly, interest rates, and investment returns.

Ready to Turn Your Mortgage Into a Wealth-Building Asset?

Choose the option that works best for you

Option 1

Book Your Free Debt Recycling Assessment

In this 30-minute consultation, we'll review your financial position and create a personalized debt recycling roadmap.

  • Analysis of your current equity position
  • Estimated tax savings over 10-20 years
  • Investment strategy options
  • Projected wealth-building timeline
  • Recommended loan structure
  • Clear next steps (no obligation)

100% confidential. No obligation. No pushy sales tactics.

Option 2

Download Free Guide

Learn everything about debt recycling at your own pace with our comprehensive guide

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