Equity Recycling: Turning Your Home into an Investment Engine
Christian Stevens, Mortgage Broker
Published November 26, 2025, 2:10 P.M ET
Equity recycling is a strategy that transforms your home’s built-up value into a tool for long-term wealth creation. By systematically reborrowing and reinvesting equity — while paying down non-deductible debt — you can accelerate your financial freedom without needing to sell your home.
Here’s how it works, and how to do it the smart way.
🔑 Key Facts
- Equity recycling is a strategy that uses your home equity to invest, while redirecting personal loan repayments to reduce non-deductible debt.
- It converts "bad debt" (your owner-occupied home loan) into "good debt" (tax-deductible investment loan) — maximising long-term tax efficiency.
- Popular with stable, high-income earners focused on wealth creation through smart credit structuring.
- Flint helps implement equity recycling with the right lending products, clean loan splits, and strategic advice alongside your accountant or adviser.
What Is Equity Recycling?
Equity recycling is a strategy where you:
For example:
- Pay down your home loan (non-deductible debt)
- Reborrow that paid-off amount using a loan structure like a split or line of credit
- Use the borrowed funds for income-producing investments (e.g. shares, ETFs, property)
The key benefit? You convert your home loan into tax-deductible investment debt over time, improving your cash flow and building wealth in parallel.
How It Works in Practice
Let’s say:
- You have a $600,000 home loan and $100,000 in redraw or offset
- You reborrow $100,000 to invest in a diversified share portfolio or property deposit
- The investment generates income and (hopefully) capital growth
- Each year, as you pay down more of your home loan, you reborrow that portion again — gradually replacing personal debt with investment debt.
To keep deductibility clean, the investment portion should be set up as a separate loan split (not mixed with personal spending).
Why Consider Equity Recycling?
Improve tax efficiency: Investment loan interest may be tax-deductible, unlike your owner-occupier mortgage.
Accelerate debt reduction: By investing income and tax refunds, you can pay off your home loan faster.
Build an income-producing portfolio: Over time, your investments can generate passive income for retirement or financial freedom.
Stay in your home: You don’t need to sell to invest — just restructure.
Key Considerations and Risks
- You need strong financial discipline: You’re managing two loans and a long-term investment strategy.
- It works best with surplus cash flow: This helps you stay ahead of repayments and invest consistently.
- Returns aren’t guaranteed: All investing carries risk — you need to be comfortable with market movements.
- Structuring matters: The investment loan must be kept separate for tax purposes, ideally with help from a financial adviser and mortgage broker.
Most issues come from poor split structuring or mixing personal and investment debt, which can break deductibility rules.
Who Is Equity Recycling Best Suited To?
There are a few exceptions where cross-collateralisation might be considered, such as:
- Homeowners with a stable income and equity: Particularly those with 5+ years remaining on their mortgage.
- People in the wealth accumulation phase: Aged 35–55 looking to boost retirement or investment income.
- Tax-conscious investors: Higher-income earners who want to shift from personal to deductible debt.
But in most residential and investment lending cases, it’s best avoided.
📞 Want to Put Your Equity to Work the Smart Way?
At Flint, we work with clients to:
- Identify how much equity you can safely recycle
- Set up clean loan structures for tax and flexibility
- Align your lending with long-term wealth and investment goals
Talk to Flint today and let’s future-proof your lending strategy — one smart loan structure at a time.
To keep deductibility clean, the investment portion should be set up as a separate loan split (not mixed with personal spending).
Recommended Articles
Home Loans
Downsizing with Confidence: Financial Tips for Over-50s
Aug 18, 2025
Home Loans
Unlocking Financial Potential for Senior Executives: Leverage...
Aug 18, 2025
Home Loans
The Essential Guide to Deposit Bonds: What Homebuyers and...
Aug 18, 2025
Monthly Newsletter
Subscribe and be the first to know about what’s happening in the market.
Contact Us Today
Learn more about how we can help you achieve your financial goals.
Don’t worry, there’s no commitment. Strategic guidance guaranteed.