Debt Recycling Calculator

A worked example

Say you owe $500,000 on your home loan at 6.0%, with 25 years remaining. You redraw $100,000 of equity into an interest-only investment loan at the same rate, and invest it in a portfolio yielding 4.5% in income. The investment loan costs $6,000 a year in interest; the investment produces $4,500 in income. On a $120,000 taxable income, your marginal rate is 30%, so the deductible interest generates an $1,800 tax refund. $4,500 income + $1,800 refund − $6,000 interest = $300 a year redirected onto the home loan — modest on its own, but compounding that extra repayment every year still pays the home loan off sooner and saves real interest over the loan's life, on top of the portfolio itself growing in value over time.

What this calculator assumes

• One recycled tranche — a single equity redraw invested once, not the full repeating cycle of continually redrawing as the home loan shrinks.
• The investment loan is interest-only and its balance never reduces — the point of recycling is to keep deductible debt in place, not pay it down.
• 100% of a positive net cash flow is redirected as an extra home loan repayment; a negative net cash flow is assumed funded from other income, with no extra repayment made.
• Your marginal tax rate is derived from Australian resident tax brackets for 2024–25 and excludes the 2% Medicare levy.
• Investment income and capital growth are separate, genuinely uncertain assumptions — growth is never guaranteed, and income yields move with markets.

Debt recycling is a genuine strategy with real risks — investment values can fall, rates can rise, and gearing amplifies both gains and losses. It's worth structuring with a mortgage broker, financial adviser and accountant, not just a calculator. Akweno then tracks the home loan, the investment loan and the portfolio side by side as the strategy plays out. Start free.