Debt Recycling - Why and How

Debt recycling -  For the interested or seasoned investors, debt recycling is a powerful tool which we often adopt within our strategy for customers, when discussing options for refinancing and structuring of their home loan, as we help our customers accelerate and achieve their financial goals ie. paying off the home loan sooner.

Did you know: Debt recycling when implemented correctly, essentially reduces your effective borrowing rate by your marginal tax rate.

By creating split loans, it is possible to create a tax deductible loan even though it is secured with the owner occupied property, which would otherwise be non tax deductible. 

In essence, you still have the same loan amount and bearing interest, but by paying down and re-borrow the funds via a redraw facility prior to investing, part of the loan has become tax-deductible for the life of the loan.