What Is Debt Recycling?

Debt recycling is a smart financial strategy where you gradually replace your non-deductible home loan debt (your mortgage) with tax-deductible investment debt. The idea is to use the equity in your home to invest in income-producing assets, such as shares or investment properties. As you pay down your home loan, you borrow that amount back for investing, recycling the debt into something that works for you, not against you.

Why Use It? The Benefits

Tax Advantages

The interest you pay on your home loan isn’t tax-deductible, but the interest on investment loans often is. By shifting your debt from personal to investment purposes, you may be able to claim tax deductions on the interest payments. This helps reduce your overall tax bill and puts more money back in your pocket, transforming "bad debt" into "good debt."

Accelerated Wealth Building

Instead of waiting years to save up lump sums for investing, debt recycling lets you tap into your home’s equity to invest now. Over time, this can speed up your ability to build wealth, as the returns from your investments may begin compounding sooner. It’s about putting your money to work more efficiently.

Greater Market Exposure

Using borrowed funds allows you to invest more than you could with cash alone. This gives you exposure to larger or more diversified assets, which can lead to greater returns. Over the long term, compounding returns on a bigger base can significantly accelerate your financial growth.

Is Debt Recycling Right for You?

Do you have non-deductible debt?

If you’re paying off your home and still owe a significant amount, your money may not be working as hard as it could. Debt recycling gives you the opportunity to reallocate that equity toward income-producing investments, turning your everyday mortgage repayments into a more powerful financial tool.

Are you looking to build long-term wealth?
Debt recycling isn’t for everyone, it requires discipline, a long-term mindset, and a good grasp of financial principles. It’s best suited to those who are comfortable with some risk, have steady income, strong equity, and want to build a solid investment portfolio over time. When done right, it’s a powerful strategy for wealth creation and financial independence.