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If you have been a homeowner for a few years, chances are the value of your property has risen whilst your mortgage has reduced. This equity in your home is a potential gold mine.

Have you ever thought about how you can make the equity in your home work harder for you?

How you ask? It’s easy! The strategy is called debt recycling.

Agreed, the strategy is not for everyone, but in the right circumstances it can considerably increase your wealth over the long term by increasing your exposure to growth assets and of course the income those assets create.

Many people have taken this opportunity but before you jump into the strategy, answer the following questions:

  1. Do have at least a ten-year time horizon?
  2. Can you manage your debt and resist the temptation of easy access to cash?
  3. Does the household have a stable income to maintain a secure financial position?
  4. Are you willing to invest in growth assets that may fluctuate in value over the short term?

If you answered “YES” to them a debt recycling strategy may just be right for you.

A gearing strategy is not for short-term speculation but can be an effective one for long-term investment in quality growth assets.

Advantages of a home equity loan include:

  • A simpler application process.
  • Lower interest rates than on other loans.
  • Interest costs for investment purposes are tax deductible.
  • Higher loan-to-value ratio than margin loans and no margin calls!

Of course, the key question is what sort of investment to make with your borrowed funds? There are costs associated with borrowing so over the long term the return from the investments must be greater than these costs.

Is this is the right strategy to accelerate your financial position? Talk to a Financial Advisor today about the most ideal financial journey for you.

Modoras Pty Ltd ABN 86068034908 AFS License No. 233209. This article contains general advice information only and is not intended to represent specific personal advice. No individual personal circumstances have been taken into consideration for the preparation of this material. It is recommended that you obtain your own personal professional financial advice before making any financial investment decision.
  • Thanks for your article,great information!

    Reply

  • Not really for me but good to know about anyway

    Reply

  • Good knowledge to know! Thanks for sharing this!

    Reply

  • this was really interesting to read. i can’t wait to buy a house though

    Reply

  • yes certainly something to think about hey

    Reply

  • interesting but as it says its not for everyone and it is not for me but still interesting

    Reply

  • Thanks again for sharing; friends have found it useful.

    Reply

  • Thanks again for sharing this information; have passed it onto friends.

    Reply

  • This is how we managed to buy our investment property.
    It still means a lot of hard work to get the mortgage down, but it is worth it for the long term rewards.

    Reply

  • An interesting article. I’m refinancing my home loan for home improvements which will hopefully pay off with increased value in the long run. This is something to consider for the future.

    Reply

  • Interesting article and read, thanks for sharing.

    Reply

  • Interesting article

    Reply

  • Interesting idea, thanks for the article.

    Reply

  • Some great advice here, very helpful, thanks for sharing.

    Reply

  • that was a great read thank u for the points that u pionter out

    Reply

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