As a client of Wealth on Track
you have access to our exclusive Mortgage Solutions offering:
• Assessment of your loan to determine if it is right for your needs
• Assistance with strategies to own your home faster
• Market leading lending products and providers through our panel of lenders
• Lending and credit advice to support your Financial Adviser’s strategy
• An easy to access point of contact for you during the loan application process
As you pay down your home loan, you may want to progressively redraw the equity you create for investment purposes
There are many strategies that we have for managing your debt. Debt strategy is probably the thing we see clients doing poorly most often.
There are many debt strategies that we use but one of the most exciting is Debt Recycling.
Two concepts should be understood first:
Efficient Debt: This means you get a tax deduction on the debt
Inefficient Debt: No tax deduction on this debt (generally your personal debt – home loan, car loans, personal loans and credit card debt)
While it's important to reduce inefficient home loan debt as quickly as possible, it's also important to build wealth for the long term to meet your lifestyle goals.
However, many people wait until their home loan is paid off before thinking about investing. Unfortunately, this means they invest later in life, and don't give their investments time to grow.
With debt recycling, you need to:
1. Use the equity in your home to establish an investment loan (such as a line of credit),
2. Invest the borrowed money in assets such as a diversified share portfolio
3. Use the investment income and tax advantages arising from the geared investment, as well as your surplus cashflow, to reduce your outstanding home loan balance
At the end of each year, you can borrow an amount equivalent to what you've paid off your home loan and use the money to purchase additional investments.
The process is then continued each year until your home loan is repaid. After that, your surplus income (including investment income and tax advantages) can be used to acquire additional investments or pay down your investment loan.
For the latest information about the official interest rate, visit the Reserve Bank of Australia website.