Strategic Debt: Turning Liabilities into Opportunities

FAQs

• Q: Should I pay off my mortgage or invest?

  A: This is one of the most common financial dilemmas. The answer often hinges on your goals, interest rates, tax bracket, and time horizon. We often call home equity 'dead equity.' While it does add to your net worth, it could still be working for you by leveraging that value elsewhere. You can generate a greater return than if the money simply sits tied up in your home. This is called ‘gearing’ and can be risky. We can model both scenarios to show you which path creates the most net wealth, the risks involved and give you the confidence of a clear strategy direction to meet your goals.

• Q: What is "Debt Recycling" and how does it work?

  A: Debt recycling involves using the equity in your home to invest, effectively turning non-deductible (bad) debt into tax-deductible (good) debt. Over time, the tax savings and investment growth can significantly accelerate your mortgage payoff and total net wealth.

• Q: Is an offset account better than a redraw facility?

  A: While both reduce interest, an offset account offers more flexibility and potential tax benefits, especially if you ever decide to turn your current home into an investment property in the future. However, it’s important to understand your debt product and it’s pros and cons. While we are not mortgage brokers, we do have specialists that we can refer to you for specific mortgage advice.