Tax Planning Strategy #3 – Debt Optimisation: Pay Off Your Home Loan Sooner!

Debt optimisation (sometimes referred to as “Debt Recycling”) is a financial strategy which creates wealth over time and improves an individual’s debt structure. Achieved, in the majority of cases by:

• Using all surplus income to reduce the home loan (non-tax deductible “bad debt”);
• Creating or increasing investment debt (tax deductible “good debt”) by drawing against equity in the home; and
• Using this borrowed money to build an investment portfolio.

It is a great strategy that can be adapted to suit your goals and time horizons. Though, it is important to note that borrowing money to invest and budgeting are key components.

Here is an example of how the assets and cash flow involved in a debt optimisation strategy using a “split loan”:


Your Action Plan

Contact us TODAY for a FREE review of your current loans and advice on whether you would benefit from a Debt Optimisation strategy! We can easily provide some modelling of the benefits to you, which can amount to tens- or even hundreds- of thousands of extra dollars over the years.

Published : 27 May 2014

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