Doctors often have two advantages that suit debt recycling: stable high income and lender policies most borrowers never see. We structure the loan so both work in your favour.
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Debt recycling gradually converts the non-deductible debt on your home into deductible debt used to invest, so that over time more of your interest works for you at tax time and your home loan reduces. It is a long-term strategy, not a quick win, and it uses your home as security.
Two things make it a natural fit for many doctors, dentists and specialists: income that is typically high and stable, and access to lender policies that are not offered to the general public. Stable income supports the cashflow discipline the strategy needs, and a higher marginal tax rate generally means the deduction on the investment portion is worth more. The profession-specific lender concessions are where a medical borrower is genuinely different, and that is what this page focuses on.
Several Australian lenders treat eligible medical professionals as lower-risk borrowers and offer policy concessions that other applicants cannot access. The best known is the waiver of Lenders Mortgage Insurance.
LMI is the insurance a lender usually requires when you borrow above 80 percent of a property's value, and it can cost many thousands of dollars. For eligible medicos, some lenders waive it entirely, in some cases up to around 90 to 95 percent of the property value, depending on the lender and your specific role. Other concessions can include more generous servicing treatment and, at times, pricing benefits.
Eligibility is not automatic. Which professions qualify, the maximum loan-to-value ratio allowed, and the concessions on offer vary considerably between lenders and can change. Some policies cover a broad list of medical roles, others are narrow. Part of our job is matching your role to a lender whose policy actually fits.
Concessions like an LMI waiver matter for debt recycling because they affect how much usable equity you can access and how efficiently you can borrow to invest.
Being able to borrow to a higher loan-to-value ratio without paying LMI can mean more usable equity to recycle, without the drag of an insurance premium eating into the benefit. That said, borrowing to a higher ratio increases leverage, and leverage cuts both ways. More borrowed against your home means larger movements, up and down, in the invested portfolio. The concession is an efficiency, not a reason to borrow more than you are comfortable holding through a market fall.
The concessions get you access. The loan structure decides whether the strategy holds up. If the borrowing used to invest is not cleanly separated from your home loan, the interest may not be deductible, so the structuring is where the outcome is really won or lost. You can read how we build the splits on our loan structure page.
Most of the medical clients we work with are short on time, not short on income. You do not need to become an expert in loan splits and sub-accounts. Here is broadly how we work.
We review your equity, income and role, and identify which lenders offer medico policy you may qualify for.
We set up the loan as separate splits so the investment borrowing is kept apart from your home loan and the interest can be traced from the first dollar.
We arrange the lending. Your financial adviser recommends the investments and your accountant or registered tax agent confirms the tax treatment. We keep the structure consistent with their advice.
Once invested, income and any tax refund are directed back to reduce the home loan, and the process repeats over the years as equity allows.
Debt recycling is a leveraged strategy secured against your home, and it can amplify losses as well as gains. The tax benefit depends on your circumstances and on current law, and medico lender concessions depend on eligibility that varies by lender and role and can be withdrawn or changed.
None of this is a promise of a particular result. Before proceeding you should get personal advice from a licensed financial adviser and a registered tax agent. Our role is to arrange and structure the lending so that, if the strategy is right for you, it is built correctly.
Book a free, no-obligation call to see whether medico lending policy and debt recycling could work together for you.
Book a free call →It depends entirely on the lender. Some policies cover a broad range of roles including doctors, dentists, specialists, veterinarians and certain allied health professionals, while others are narrower. The eligible list, maximum loan-to-value ratio and the concessions themselves vary and can change, so we check current policy against your specific role.
Not necessarily. A waiver can make borrowing more efficient, but higher borrowing means more leverage against your home and larger movements in the invested amount. How much to borrow is a personal decision best made with your financial adviser, based on your comfort with risk.
No. We arrange and structure the lending only. Your financial adviser recommends the investments and your accountant or registered tax agent confirms the tax position. We make sure the loan is structured to support their advice.
Why the deduction is worth most at the top marginal rates.
Read more → GUIDEThe splits and sub-accounts that keep your deductions clean.
Read more → GUIDEHow usable equity is worked out and why you can start small.
Read more →
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.
Alex, Jess and the Kingfisher team were second to none and their process from start to finish was faultless. As a self-employed business owner, it can be difficult to obtain finance at the best of times. The Kingfisher team made this an easy and efficient proposition and their continued transparent and efficient communication ensured we were kept up to date at all times. Highly recommend them for your finance needs!
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.
