Question 1

What is debt recycling?

Accepted Answer

Debt recycling is a strategy where you make extra mortgage repayments, then redraw that equity into a separate investment loan. The investment loan interest is tax-deductible (unlike mortgage interest on your home), effectively converting bad debt into good debt while building an investment portfolio.

Question 2

Is debt recycling risky?

Accepted Answer

Yes, it carries investment risk. If your investments fall in value, you still owe the investment loan. It works best for people with stable income, long time horizons (10+ years), and comfort with market volatility. The tax benefit helps offset risk, but it is not guaranteed to outperform simply paying off your mortgage.

Get notified when we add new calculators