Every other person wants the silver bullet to delete their mortgage.
They want the “hidden secret” or some kind of magic “strategy” to repay their home loan in six years.
You know, like the B.S. the drongos on YouTube flogging investment property under the pretence of mortgage-reduction and tax-minimisation are claiming their “system” can do.
Firstly, don’t buy the crappy concepts that most property “gurus” are selling – It’s junk.
I am the guy who has to come in and sweep up the ashes of financial destruction 15-years after the new build in a far-flung part of the country didn’t work out as the slippery-smooth sales rep claimed it would.
Secondly, investing in anything only because it might permit you to reclaim part of the tax you’ve already paid is about as dumb as you can get.
Only a dummy would think buying a loss-making investment is a good thing to do.
Thirdly, there is no silver bullet. So you can stop looking for one.
However, for a small handful of people in the right situation, there are a few things that can be done to really speed up the rate at which they can pay out their non-deductible (home) mortgage and “free up” cash sooner.
Me repeating myself for the 417th time: This is a good thing because you finish making a mortgage repayment, so you can invest and get yourself into a spot where you don’t have to work for money.
Don’t you like the sound of that?
Here’s what you need: equity, income and enough of it spare.
Here’s how: Basically, what you’re doing is converting equity into credit, then using that credit to buy an income-producing asset. Then you use the income from that asset to repay the non-tax-deductible mortgage.
Meanwhile, you would have a line of credit or similar facility which is funding the repayments of the loan (and all other expenses) used to purchase the income producing asset.
Some call it “recycling” and we are very good at setting these things up. You create more credit, yes. But you are using non-taxed income to repay your home and get rid of that years in advance – killer strategy.
The new lending that is used solely for investment purposes is probably tax-deductible – if your accountant says so.
I can’t say so.
The word “probably” is my way of saying to you: speak to me about it and I will get you with the right people who can tell you what’s legally possible according to the ATO and your situation.
A very large part of wealth-building revolves around legal tax-minimisation.
You might use the equity in your home to fund a land subdivision, sell the blocks and repay your mortgage.
You might buy a high-income investment property using the equity in your home, create a line-of-credit loan, use the rental income to repay your mortgage and “capitalise” the investment loan repayments by using the line-of-credit to fund those repayments.
The strategy is to repay the bad loan and minimise non tax-efficient lending. The tactic is the recycling structure.
The investment is just the tool. Get it? People overthink this bit.
But don’t let some dummy sell you a newly built cardboard “house” in a fringe area of the country to do this – it will give you 10 years of pain and no gain.
You want to get it all and you can.
To make these ideas happen you will not be able to rely on your bank – few of them have the product facilities to set up the right structure.
Most brokers – and I say this respectfully – aren’t interested in doing the huge amounts of set-up and assessment work, or have the patience to do the work, or have the resources to work on these types of deals in a timely fashion and not jeopardise their simple home-loan-type business model.
We do because there’s seven of us.
I came into mortgage broking through property investment and went full-time into structuring lending to purchase investments.
It’s taken years and a lot of work, but I’ve got the knowledge and experience and importantly, the product options needed to create the structures that can facilitate the repayment of non tax-deductible lending at a rate way faster than grinding away making the minimum repayment with after-tax income.
Test me: Book a 10-minute phone Finance Consultation ==>HERE.
The call is free, but only 10-mins, and to be honest, there won’t be much small talk – we are lodging $10m+ in loans each month which is massive amounts of work for a boutique firm like ours.
Apologies in advance if we get straight down to business, but if that’s the kind of person you are, we will get along nicely indeed.
Cheers,
Brodie Brown
Professional Mortgage Broker