Preserving wealth and enhancing cashflow and debt management utilising a debt recycling strategy

One strategy we offer to our clients is debt recycling, a powerful wealth creation approach that may suit certain individuals. Debt recycling allows you to tap into the existing equity in your property or investment portfolio, unlocking its potential to generate further wealth.

Understanding debt recycling?

Debt recycling is a debt management, cashflow management, and income optimisation strategy that involves utilising the equity in an existing property or investment portfolio to raise tax-deductible debt, which is then used to invest in income-producing assets. The strategy aims to create wealth, be tax effective and reduce non-deductible debt.

Utilising Debt Recycling

Utilising debt recycling depends on the specific needs and circumstances of the investor. It is recommended to consult with a qualified financial advisor or tax professional to evaluate individual situations. However, debt recycling may be appropriate when:

  1. A client with significant equity tied in a property or investment portfolio and wants to unlock its potential.
  2. The client has a steady income that can support the repayment obligations of both the non-deductible debt and the investment loan.
  3. The client has a long-term investment horizon and understands the potential risks associated with market fluctuations.
  4. The client seeks tax efficiency and can benefit from tax deductions on interest expenses.
  5. The client demonstrates financial discipline and is committed to using investment income to repay the deductible debt.

How we can help

At BMP Wealth, we prioritise your financial well-being and are dedicated to providing you with the highest level of service. Our experienced team is ready to assist you in exploring the potential benefits of debt recycling and determining if it’s the right strategy for you. Together, we can navigate the complexities of the financial landscape and work towards your long-term financial success.