Debt Recycling: Grow your wealth while reducing your Home loan

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    Build your wealth via debt recycling

    Greg, aged 45, and Jackie, aged 44, own a home worth $600,000 and they still owe $300,000 on their mortgage. Their after-tax salaries are $3,002 and $1,571 per fortnight and their combined living expenses are $4,800 per month.

    They want to pay off their home loan quickly. To achieve their goal, they have been crediting their salaries into a 100% offset account (see Strategy 3).

    They also want to maintain their lifestyle when they stop working. So, their financial adviser suggests they use debt recycling to complement the wealth they are accumulating in superannuation.

    They’re comfortable with a total debt equivalent to 67% of their home value (ie $400,000). Given they currently owe $300,000, they use the equity in their home to establish an interest-only investment loan of $100,000 and invest the money in Greg’s name in a managed Australian share portfolio.

    Greg and Jackie

    Greg and Jackie

    Consolidating Debts

    Strategies we may consider for you are:

    Consolidation to save money

    Harness your cash flow to reduce inefficient debt

    Use your emergency cash reserve more effectively

    Used borrowed money to
    build wealth

    Transform your debt using a
    financial windfall

    Build wealth via debt recycling

    Offset your investment loan to retain tax efficiency

    Make gearing more tax effective for a couple

    Leverage your investment via an internally geared share fund

    TOTAL WEALTH MANAGEMENT PTY LTD | ABN 14 079 194 808 is an Authorised Credit Representative of Centrepoint Alliance Lending Pty Ltd | ABN 40 100 947 804 |  Australian Credit Licence No. 377711.