Aussie Firebug

Financial Independence Retire Early


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Summary

Today I’ve invited Terry Waugh back on the podcast to talk about a topic that’s very popular in the Aussie FIRE community. I recently published an article about how we (Mrs. Firebug & I) are Debt Recycling and have received a lot of questions from the community. Terry is one of the most knowledgeable people I know on this topic and he has kindly agreed to join me to answer as many questions as we had time for.

Some of the topics we cover are:

  • What is Debt Recycling? (02:28)
  • What are some of the ways you can DR and how does it work? (03:48)
  • What happens if you need to sell some shares due to an unforeseen event? (21:26)
  • What happens if you don’t have a lump sum to invest? Can you DR with dollar-cost averaging? (23:04)
  • Are there any products on the market that make DR any easier? (26:42)
  • Can you explain your tip “Repayment needs to be done once in full”? (28:30)
  • Can you use a fixed loan with DR or does it have to be variable? (29:30)
  • Is DR more or less effective if the interest rates were to rise? (31:27)
  • Can you still claim the interest if you redraw the money to increase leverage on a marginal loan to maximise purchasing power? (33:59)
  • Does the loan need to be in your name to get the total deductions? (35:37)
  • What happens if you refinance? (37:40)
  • What happens if you sell the PPoR later down the track? (41:07)
  • What happens if you convert the PPoR to an IP later down the track? (43:59)
  • Can you sell a chunk of your portfolio in order to pay down the loan, redraw it back out and then buy the exact same shares as before? (47:15)
  • What happens if the income from the trust is not enough to cover the interest on the loan? (49:14)
  • If your PPoR loan is P&I do you have to structure the loan agreement to the trustee as P&I as well? (51:06)
  • Can you DR with a trust if both the borrower and the trustee are the same person? (52:53)
  • Debt Recycling an investment property (54:03)

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The information in this website and the links provided are for general information only and should not be taken as constituting professional advice. You should always do your own research when making any financial decisions. 

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