A couple paid their home loan down from $525,000 to $60,000, then borrowed the deposit for a $1.4m investment property back as a separate deductible split. Unconditional in 2 business days.
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A married couple with no dependants: a maintenance technician with more than 10 years at his employer on a base income of $165,454, and a solicitor on $105,000. Their home, valued at $1,300,000, has been owned since February 2021.
Both are high income earners who watch their discretionary spending closely.
None of the interest on their home loan was deductible. They held $465,000 in offset, enough to clear most of the $525,000 balance, and they also needed a deposit and costs for a $1,400,000 investment property.
Using the cash directly as the deposit would have left the non-deductible home loan where it was. Paying the home loan down first, then borrowing the deposit back against the home as a separate investment split, turns the same dollars into deductible debt.
| Item | Value | Purpose |
|---|---|---|
| Home | $1.3m | Non-deductible |
| Investment property | $1.4m | To be purchased |
| Offset savings | $465k | Held against the $525k home loan |
| Metric | Figure |
|---|---|
| Lender | Macquarie |
| Approval timeframe | 2 business days to unconditional approval |
| Repayment type | P&I on all lending |
| Rates | Variable: 5.34% home split, 5.44% equity split, 5.54% purchase loan |
| Non-deductible debt cleared | $465,000 (home loan down from $525,000 to $60,000) |
| Non-deductible home loan balance | $60,000 |
| New deductible equity release split | $390,000 |
| Deductible purchase loan, pre-approved | $1,120,000 |
| Deductible investment debt, total | $1,510,000 |
| LVR on the home | 34.62% |
| LVR on the investment property | 80% |
The $390,000 equity split at 5.44% generates $21,216 of interest in year one. With one partner on the 37% rate and the other on 30%, each plus the 2% Medicare levy, the anticipated combined saving is $7,532 a year.
| Figure | |
|---|---|
| Annual interest on $390,000 at 5.44% | $21,216.00 |
| Partner 1 marginal rate (37% plus Medicare levy) | 39% |
| Partner 2 marginal rate (30% plus Medicare levy) | 32% |
| Partner 1 anticipated saving (50/50 split assumed) | $4,137.12 |
| Partner 2 anticipated saving (50/50 split assumed) | $3,394.56 |
| Combined anticipated tax saving | $7,531.68 |
The $1,120,000 purchase loan adds a further $62,048 of interest in year one at 5.54%.
*Anticipated figures for year one on the stated assumptions, subject to confirmation by the clients' accountant. We are not tax agents.
Budget note. The 2026-27 Federal Budget changed the rules for established investment property bought after 12 May 2026: from 1 July 2027, net rental losses on those properties can no longer be offset against salary. The same pay-down and re-borrow structure continues to apply to share and ETF investing. See debt recycling vs negative gearing.
Planning a purchase? See debt recycling with an investment property and starting debt recycling with savings.
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1. Arranged a loan when our small business situation made it difficult to qualify.
2. Met requirements to have funding available by a specified date.
3. Understood my needs to setup debt recycling to allow tax structuring.
4. Communicated well throughout.
I would use their services again.
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Alex and Jess dealt with our investment loan and provided a top tier service. They kept us up to date and communicated every step of the process making it a seamless and smooth experience! Awesome work team we will definitely be back for future loans!
Jess from Kingfisher was outstanding. I couldn't fault her communication, expertise or dedication to finding the best loan for our situation. The entire process was seamless from start to finish. We'll definitely be using Kingfisher again in the future. A top-tier organisation.
