Client Alert! Debt Recycling
Do you want to pay off your
home loan quicker?
Case Study
Jack and Kate have a home loan of $350,000 with a 5%
interest rate paying $500 a week. Jack earns $80,000 a year
and their home value is $500,000.
They are wanting to build wealth for the future and pay off
their home loan as soon as possible. They can budget $300 a
week towards the Debt Recycling Strategy.
What can you achieve through Debt
Recycling?
Debt recycling is a strategy helping ordinary Australians pay
off their home loans far sooner than ever thought possible. It
enables you to:
1.
2.
3.
Repay your home loan quicker saving large amounts of
interest.
Build wealth in an investment portfolio outside of
superannuation.
Increase your tax deductions each year saving you tax.
Who can benefit?
Anyone who has a home loan with equity and wants to start
investing for the future now, whilst also saving tax.
How does it work?
Using this Strategy Jack and Kate have paid off their home
loan in 10 years, over 10 years before they would have done
without using the Debt Recycling strategy.
Jack and Kate will also have built a net investment portfolio
which after 20 years will be worth nearly $750,000.
If they wished they could pay the investment loan off earlier
using the money previously used for the Home loan.
Debt Recycling involves 3 keys steps:
1.
2.
3.
Use your equity as security for a separate investment
loan.
Use the investment income and any tax savings you
receive from your investments (as well as any surplus
cash flow) to reduce your outstanding home loan balance
Throughout the year, re-borrow from your investment
loan the amount you have paid off your home loan to
purchase additional investments.
Over the 20 years Jack created additional tax savings of over
$160,000, an average of $8,000 a year.
Interested?
Call us today on (07) 5437 8888 to see how
Debt Recycling can help you.
This article is provided as general information only and does not consider your client’s specific situation, objectives or needs. It does not represent accounting or financial
advice upon which any person may act. Implementation and suitability requires a detailed analysis of a client's specific circumstances. © 2014 Initiative Group